7 October 2020

2020 has been very eventful so far and some of the developments have had an impact on fleet drivers and employees with company cars.

However, many of those affected may not be aware of all the latest changes. For example, a recent study revealed almost a third of fleet managers did not know about the new company car tax rates.

We understand that sometimes relevant information can get buried under the vast amount of news we encounter daily. This is why we thought we’d make a list of some of the industry developments that affect company car drivers and fleets.

New BiK tax rates

In 2019, the Government announced new Benefit in Kind (BiK) tax rates designed to promote vehicles with low emissions. These company car tax changes have had the greatest impact on fleets and employees who have cars as part of their benefits package.

For 2020-21, electric vehicles (EVs) and other ultra-low emission vehicles (ULEVs) can enjoy 0% BiK tax. After this date, drivers would have to pay tax but it will only be a small amount.

The announcement was a way of encouraging fleets and drivers to ‘go electric’ and it did have a positive impact on EV uptake.

Of course, not everyone was happy with this announcement, especially diesel car drivers, who have to pay a diesel surcharge. Some company car drivers have to travel long distances and feel that diesel is the more cost-effective and efficient option for them. Such drivers would be facing increased BiK tax based on their vehicle’s higher emissions.

However, this might change as EVs develop longer ranges. At present, there are certain battery-powered cars that can go up to 300 miles on a single charge. With more car brands investing in electric technology, the EV range is set to increase in the near future. This would mean people who drive diesel cars could get an electric alternative with the range they need at a much lower fuel cost.

We foresee more and more fleets opting for greener options in the future, especially as the Government pushes the Road to Zero agenda, invests in better infrastructure and provides grants for EV adoption.

WLTP

Another reason why company car drivers who used diesel were adversely affected by the new BiK rates is that 2020 is also the year when the UK transitioned completely to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP)

Since the 1980s, the CO2 emissions of a vehicle were measured using the New European Driving Cycle (NEDC). This test was widely criticised as being inaccurate and not suitable for modern vehicles. In order to get more realistic emission measurements, a new testing system was needed.

That new system is WLTP, which uses a longer measuring time and higher speed to get a more accurate emission rate for a vehicle in laboratory settings.

Whilst it was introduced in the European Union in 2018, the CO2 figures obtained from this system were only disclosed on 1st April 2020, in time for the changes in taxation.

The result was 20% higher measurements of emissions for diesel and petrol cars, and since vehicle emission figures impact BiK tax, it meant more tax for company car drivers who have cars powered by fossil fuels. As we mentioned earlier, LEVs, in contrast, would enjoy no tax for the same financial year.

As a result of this newer and more accurate system of testing, fleet owners will have a better understanding of the emissions produced by their vehicles. Since these affect the tax they pay on the vehicle, we think this will lead to fleet owners and company car drivers moving towards low-emission vehicles (LEVs) and ULEVs for better tax rates and a lesser impact on the environment.

Mechanic measuring a red car's emissions - industry developments affecting company car drivers in 2020

No-deal Brexit

One of the consequences of a no-deal Brexit was that fleets were told to prepare for vehicle price increases. This increase was a result of disruptions to supply chains in the automotive sector as well as tariffs on car parts and finished new cars crossing EU borders. This development affects fleets and their budgets for new vehicle purchases too.

Whilst company car drivers might not be directly impacted by more expensive cars, they may find it impacting their BiK tax.

BiK tax is calculated on the basis of the list price of the vehicle as well as its emissions and the employee’s earnings. If the price of the car is higher, it could mean a higher tax for them.

However, if company cars start moving towards electric, the price of the car might be balanced out by the low BiK tax rates ULEVs enjoy.

Measures for cleaner air

Whilst most people are familiar with the low emission zone (LEZ) in London, many may not realise that other cities are introducing similar clean air zones (CAZ) to improve their air quality.

Company car and fleet drivers in these cities might need to pay a charge to drive into or through these zones if their car is not low-emission.

Here is a resource that tells you about the cities in the UK that have or are planning to introduce a CAZ.

COVID-19

COVID-19 has had a lasting impact on the vehicle industry. Here are some of the ways it has affected fleet and company car drivers.

Increase in hiring of delivery drivers

Since people were encouraged to stay at home during the height of the pandemic, online shopping became very popular. As a result, while some industries had to lay off workers, courier and delivery companies had to recruit more drivers into their fleet to meet consumer demands.

Whilst the online shopping trend might go down once the situation returns to normal, it will probably not go down to pre-pandemic levels. As a result, delivery fleets would probably retain most of the drivers they hire now.

Delivery driver wearing gloves and a mask, holding a package - developments that impact company car drivers in 2020

eLearning for furloughed employees

With businesses compelled to shut down to help flatten the curve, the Government introduced several relief measures. Around 9.4 million employees were furloughed under the Coronavirus Job Retention Scheme.

Furloughed employees were not allowed to undertake any activity that might provide service to, or generate revenue for their employer. Organisations could, however, invest in eLearning and online training for their workers.

As a result, several fleet and company car drivers got the opportunity to enhance their skills or refresh their driving knowledge.

To help our customers benefit from this opportunity, we collaborated with Applied Driving Techniques to offer free driver training modules.

A new look at employee mobility solutions

Whilst a large number of employees were furloughed, there were many others who were working from home. As a result, companies realised that remote working could be a viable long-term option.

However, as there is an increase in remote working, businesses will have to look at providing ad-hoc mobility solutions rather than the traditional corporate solutions to their company car drivers.

Further reading

At sgfleet, we try to bring you news and insight that could affect you and your fleet. Here are some of the stories that could be of interest to you or your company car drivers.

Looking for more information about how you can provide a greener fleet for your company car drivers? Get in touch by emailing CSalmon@sgfleet.com or calling on 0844 854 5100 to speak to us.

Man in a business suit driving a car - industry developments impacting company car drivers in 2020