In 2002 Gordon Brown changed the way company car tax worked to encourage fleets to focus on cars that emitted less CO2. Under NEDC, as it was then, a car that emitted less than 169g/km attracted the lowest rate of just 15%.
Year on year OEMs knocked it out of the park, as they drove down reported emissions to keep company cars in the lowest bands (bands went up annually, initially by 1% of List Price, but then by 2% from 2012 and then 3%).
When the “Ultra-Low Emission Vehicle” (ULEV) rules came out, I remember writing that there weren’t any cars that sensibly got under 100g/km. Within months the OEMs proved me wrong. We’ve used the BMW 116d in our slides ever since; a 99g/km diesel car that attracted 13% scale charge (10% plus 3% diesel surcharge).
But then overnight diesels were suddenly bad. We’d all been encouraged to take them, but without warning we were hit with extra taxes.
In August 2018 the emissions rules changed. Initially we were told that tax rates wouldn’t rise, but that BMW 116D was suddenly a 116g/km car (pushing tax up on a new one by 3% of list price). In just six years the tax and NIC1A due on our BMW goes from 13% to over 30% of list price.
And then in April 2020 WLTP comes in, and many cars that emitted 100g/km before are now 135+. Despite reducing the tax rate by 2% this year (1% next, and zero in 2022/23 and later years), overall tax rates rise again by a net 2 to 3% of List Price. There’s a new BMW 116D now, with quoted CO2 of “120 to 125g/km”
You’ll read that CO2 emissions are now rising. But we disagree, they are still falling if you compare like for like. They are just measured in a different way now. The reality is that new petrol and diesel cars have never been cleaner, but that the goal posts have moved and CO2 emissions are now being reported as approx. 30% higher than they were under the old NEDC standard.
To be clear, under WLTP, Gordon’s entry point would have been around 220g/km (now 169), and the average “grey fleet” car in the UK (which is 8 years old) emits 198 under WLTP. That 116D doesn’t look so bad now does it?