Government urged to introduce progressive tax regime

The government has been urged to introduce a “progressive company car tax regime” that does not encourage employees to opt into personal contract hire (PCH) schemes and select vehicles with higher carbon dioxide (CO2) emissions than they might have chosen via a corporate scheme.

The British Vehicle Rental and Leasing Association (BVRLA) made its plea after publishing new data highlighting that the total business fleet leasing market for cars and vans had grown 7.6% year-on-year to 1.35 million vehicles.

However, the latest Quarterly Leasing Survey carried out by the BVRLA revealed that much of the growth was driven by PCH schemes - up 36% year-on-year and 7% quarter-on-quarter versus growth in the car portion of the business fleet leasing market of 2.4% to 979,000 year-on-year.

Meanwhile, average CO2 figures for newly registered lease cars grew to 111.8g/km in Q2 2017, up from 110.8g/km (+0.9%) from the previous quarter and up 0.7% compared to the same period in 2016. The main reason for the rise, said the BVRLA, was likely to be the increasing share of PCH vehicles within the wider leasing fleet. The average PCH car on BVRLA members’ fleets had emissions of 120g/km CO2, compared to the 111g/km of those on contract hire.

BVRLA chief executive Gerry Keaney said “PCH continues to drive growth in the car leasing market and this is having a clear impact on the automotive industry’s long-term goal of reducing CO2 emissions. Company cars are cleaner than the average privately procured car, and the government should be supporting this market with a progressive company car tax regime that doesn’t encourage people to do their own thing.”