TMC urges Treasury to scrap diesel BIK surcharge

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FLEETS should press the Treasury to scrap the 4% per cent diesel surcharge next year to rectify the imbalance in company car tax.

TMC said such a move would also reflect real-world cost constraints and restore badly-needed confidence to the UK’s hard-hit new car market.

HM Treasury is seeking ideas for a “simple” adjustment to VED and company car BIK to offset unexpectedly higher CO2 emission readings under WLTP.

Paul Hollick, managing director of TMC, said that removing the surcharge would not only meet the government’s desire.

The government originally committed to scrap the surcharge in 2016. But it retained, and later increased, it in the face of an anti-diesel backlash by the media over the emissions scandal.

Hollick said that stricter emissions testing has largely solved those problems. Therefore, persisting with the surcharge – especially at double the 2016 level – is unjustified.

He said: “The government is already under fire from its own business advisors for not bringing forward 2% BIK for pure EVs to help the economy and the environment.

“We believe fleets can now make a very strong case that the government can at least solve its unanticipated problem with WLTP by removing the diesel BIK surcharge at the first opportunity.

“Today’s new fleet diesel cars emit 55 times fewer particulates and nearly seven times less NOx than those being operated when the diesel surcharge was first brought in. The reality is that the surcharge was there to incentivise cleaner diesels and it has already gone a long way to achieving that goal.

“There seems no justification for holding on to it until Real Driving Emissions-certified models begin to trickle on to the market in future, especially when the government’s own guidelines for clean air zones exempt all current Euro 6 cars from toxicity charges.

“It seems quite clear that the government didn’t appreciate how much of an additional burden WLTP and correlated NEDC would impose on company car taxpayers. Removing the surcharge at the earliest opportunity (April 2020) would rectify that mistake as well as meeting the Treasury’s desire for a simple adjustment to the BIK scales.”

TMC’s submission to the Treasury will include data showing that is unrealistic to expect companies to simply drop diesels from their fleets.

Analysis carried out in December on a sample of nearly 20,000 cars out of over 120,000 live vehicles on TMC’s fuel and mileage capture database shows that 97% are diesels. Average real-world fuel economy for diesel and petrol cars has improved slightly over the last few years, by 6% for diesels and 2% for petrol.

But petrol cars still cost fleets 10% to 20% more in fuel than diesel models, depending on the price differential at the fuel pump. Petrol cars also typically impose higher tax on both driver and employers because they emit more CO2.