The Autumn Budget is likely to prompt widespread rewriting of company car choice lists to tackle new issues around plug-in hybrids (PHEVs) and double cab pickups.
The Association of Fleet Professionals (AFP) said the moves made by the Chancellor mean that the viability of both types of vehicles will now be placed under serious questioning by many fleets.
Anecdotal feedback also suggests leasing companies are already seeing drivers wanting to cancel existing PHEV orders and switch to EVs instead.
Paul Hollick, chair at the AFP, said: “The Budget can be viewed as something of a tidying-up operation by the government when it comes to company cars. The moves made on PHEVs and double cabs, as well as arguably on dealer employee car ownership schemes, have largely removed any grey areas.
“The Government is making it pretty clear that it wants all company car drivers behind the wheel of a zero emissions electric car while paying Benefit-in-Kind at the standard rate. Almost anything that resembles a departure from this model has gone.”
Hollick added that it could be argued that this provides a high degree of clarity for fleets but does also mean that some drivers and employers are facing some big bills unless action is taken.
He continued: “When it comes to PHEVs and double cabs, this is likely to lead to widespread redrawing of choice lists with a renewed emphasis on EVs.”
The Budget clearly looked to dissuade use of PHEVs as for company cars, with a jump from a typical 5% today to 18% in 2028/29. Similarly, double cabs will be treated as cars from next April but grandfather rights will apply to existing users until the 2029/30 tax year at the latest.
Hollick said: “Drivers who have recently taken on a PHEV on a four-year cycle will see their tax rise massively in its last year and no doubt many of them will head into work this morning to talk to their employer about the possibility of getting out of that car earlier.
“The situation for double cabs is perhaps less acute because of the grandfather rights situation but anyone still in a double cab after April 2029 is going to see an exponential increase in their tax. It’s possible that these vehicles will almost disappear from car fleets, although there is arguably some clarification needed if they are used strictly for work purposes only and taken home at night.”
The AFP generally welcomed the certainty provided in the Budget of having Benefit-in-Kind tax tables provided through to the end of the decade, Hollick went on to say.
“This is something that we have been requesting for some time because it means that fleets can plan for the future with certainty. While we don’t want to see Benefit-in-Kind on electric cars rise to 9% by 2029/30, we’ve accepted for a while that this will have to happen at some point, and the process appears to be being managed by the Government in a structured and responsible manner.”
And Hollick said that the new tax tables, combined with the ZEV mandate, the strengthening of EV favourability under Vehicle Excise Duty, extending 100% first year allowances and more, meant that the Government could not make it clearer that fleets should be looking entirely at zero emissions electric cars.
“When employers start redrawing choice lists, this should be treated as a central fact.”
