Let’s talk WLTP
Whether you operate cars or LCVs, our specialist fleet team is happy to discuss WLTP and the implications for your business.
6 April 2020 is the date set by the Government to change the standard for reporting CO2 emissions for passenger cars to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).
For cars registered from this date, WLTP CO2 emissions results will replace the current NEDC-correlated figures as the basis for taxation. Unlike the move to WLTP fuel economy figures that took place at the beginning of 2019, the move to WLTP CO2 figures will have real cost implications for many businesses.
With this in mind, it is important to assess the impact of these changes and act accordingly. This could mean bringing forward the registration of some of your new fleet cars or adjusting your company car policy.
It’s important that you act now to make sure your new cars are registered before this deadline, rather than waiting until next year. Lead times could delay vehicle delivery.
Most manufacturers are yet to publish their WLTP CO2 results, but the expectation is that official CO2 figures will increase by around 20-25%. Average new car CO2 emissions in 2018 were 124g/km, which means a 20% increase would raise this to 149g/km – an increase of 25g/km.
There are several ways that your fleet could be impacted by the move to WLTP emissions figures.
An increase of more than around 10g/km is likely to lead to a rise in Class 1A National Insurance contributions, as the 2% reduction in BiK bands for cars registered from 6 April 2020 will not be enough to offset the CO2 increase.
For any cars with CO2 emissions just below 110g/km currently, the switch to WLTP could be enough to take them above 110g/km, and therefore make them subject to the 15% lease rental restriction.
If your list of eligible company cars has a CO2 limit applied to help you achieve your corporate social responsibility objectives, the switch to WLTP could mean that certain vehicles will fall outside of the parameters with potential operational impacts. This means you should look for lower emissions alternatives before deciding to raise your CO2 limit.
Whilst WLTP emissions data doesn’t have to be published until 6 April 2020, all cars on sale today have been tested under this standard, which means the vehicle manufacturers will have this data.
We recommend that you contact your car’s manufacturer in the first instance. If this proves unsuccessful then contact us. We have relationships with all vehicle manufacturers and can advise you on your best next steps.
For cars registered from 6 April 2020, the Government has introduced a second BiK table which reduces the tax by 2% for the majority of CO2 bands.
This was intended to offset the increase in official CO2 emissions figures, but, in reality, will only achieve this for cars that increase by no more than around 10g/km.
Contact us or speak with your Volkswagen Financial Services | Fleet Account Manager now to discuss what actions you need to take.
This could be the ideal time to consider whether electric vehicles are appropriate for your fleet. With zero emissions while driving, they benefit from the lowest Benefit-in-Kind rates (0% in 2020/21 tax year) and Class 1A National Insurance contributions whilst significantly reducing fuel and servicing costs.
Use our EV-4-ME? and Future Fleet Analysis tools to help decide whether electric vehicles are right for you. If diesel is still the right fuel for you, look for models that are RDE2 certified: they are not subject to the 4% diesel surcharge on Benefit-in-Kind rates.
Worldwide harmonised Light-duty vehicles Test Procedure (WLTP) is a new test procedure for the measurement of fuel economy and emissions data. It has been introduced to give a more realistic view of the fuel economy and emissions performance achievable in real-world driving conditions. It supercedes the previous NEDC (New European Driving Cycle) test procedure.
The driving cycles used for the NEDC test – the familiar urban, extra-urban and combined – have been replaced by a set of driving ranges – low speed, medium speed, high speed, extra-high speed and combined – that more closely represent how vehicles are used today. These driving ranges were determined following the analysis of data collected from real journeys from across the world.
Since the WLTP methodology is fundamentally different to NEDC, it isn’t possible to meaningfully compare one set of figures against the other. Recognising this difficulty, the EU has developed a formula which translates the WLTP figures into NEDC-correlated versions. This allows comparison between vehicles type-approved under the different regulations, but it’s important to bear in mind that these figures will have been generated under the WLTP test conditions, and as such are likely to be higher.
WLTP remains a laboratory test, in order to guarantee consistent test conditions and therefore allow meaningful comparisons between vehicles.
We are working with our vehicle and data partners to bring you this new information in the clearest way possible.
It’s important to understand that the WLTP methodology doesn’t change the real-world fuel economy or emissions that a vehicle produces. However, it will impact whole-life cost calculations on both passenger cars and commercial vehicles: the calculated fuel costs will increase but, on a positive note, become more accurate.
It is also likely to impact employees’ benefit-in-kind costs, because the NEDC-correlated CO2 figure will have been generated under the WLTP driving conditions. Where a company vehicle is made available for an employee’s private use, employers’ Class 1A National Insurance Contributions will also be affected.
Since the Benefit-in-Kind (BiK) tax that a company car driver pays is based on the vehicle’s CO2 emissions, and we’ve already seen that reported CO2 emissions are expected to increase under WLTP, there is clearly the possibility of an impact on drivers’ BiK costs. The impact will differ depending on when the vehicle is first registered:
Drivers might also see a change to the vehicles available on their choice list, though this will depend on whether the company adjusts its list to allow for the higher CO2 values.
No vehicles registered before 1 September 2017 are affected by the introduction of WLTP. From this date, all new passenger car types presented for type approval must have been tested under the WLTP regime.
All new passenger cars registered from 1 September 2018 have type-approved WLTP figures, as must all new LCV types. From 1 September 2019, all new LCVs registered must have WLTP figures.
Up until 5 April 2020, all vehicles will be taxed based on their NEDC or NEDC-correlated CO2 emissions figure. This is the case for both Vehicle Excise Duty (VED) and benefit-in-kind taxation. Any vehicle registered up to this point will continue to be taxed on this basis for the balance of its operating life. All passenger cars registered after this date (i.e. from the start of 2020/21 tax year) will be taxed on the basis of their WLTP CO2 emissions figure.
From 1 September 2017 – all new types of passenger cars must be issued with WLTP and NEDC-correlated data.
From 1 September 2018 – all new passenger cars registered must be issued with WLTP and NEDC-correlated data. All new types of light commercial vehicles must be issued with WLTP and NEDC-correlated data.
From 1 September 2019 – all new light commercial vehicles registered must be issued with WLTP and NEDC-correlated data.
From 6 April 2020 – the basis for taxation for all new vehicles registered moves to WLTP.
The NEDC test was introduced in 1992 and based on theoretical driving conditions. In subsequent years, there have been significant changes in vehicle technology and driving patterns, and the figures generated have become less representative of what is attainable in the real world.
The WLTP test has been introduced to produce a set of values that are much more representative of real-world fuel economy and emissions. The driving cycles used have been developed following the analysis of data from many thousands of real journeys from across the world. The duration of the test has been increased from 20 to 30 minutes; the distance travelled from 11km to 23.25km; the average speeds have been increased, and the amount of time spent idling has been reduced. The other significant change to the test is that the impact of vehicle options, such as wider tyres or heavier items such as leather trim, is also considered. This is why you will begin to see low and high values for the fuel economy and emissions data.
It’s important to note that, whilst the driving cycles are based on the analysis of real-world journeys, the tests themselves are still performed under laboratory conditions. This is to ensure that valid comparisons can continue to be made between vehicles.
Electric vehicles are also assessed under the new WLTP regime. Whereas under the NEDC procedure they were given a single range figure, with WLTP they are issued with two range figures: combined and a new city range. As with petrol and diesel vehicles, this is intended to give a better representation of the sort of range available in the real world.
The RDE (Real-world Driving Emissions) test is a companion test to the WLTP regime. As its name suggests, it is a test carried out in the real world rather than the laboratory, and its intention is to ensure that the figures achieved under laboratory conditions are repeatable in the real world, with a degree of tolerance. It too has a phased introduction. RDE step 1 allows a vehicle to emit up to 2.1 times the amount of NOx allowed under laboratory conditions, whilst RDE2 reduces this allowance to 1.5 times.
This is particularly important for diesel vehicles because, in the Autumn 2017 Budget, the Chancellor announced that any diesel vehicle that is certified as meeting RDE2 will be exempt from the 4% diesel surcharge in benefit-in-kind. It will also be exempt from the 1-band increase in first year Vehicle Excise Duty. RDE2 compliance is mandatory for all new cars from January 2021.