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Vehicle emissions test (WLTP) and how it affects you
Vehicle emissions test (WLTP) and how it affects you
What is WLTP?
The Worldwide Harmonised Light Vehicle Test Procedure (WLTP) is the replacement laboratory testing cycle for the previous New European Driving Cycle (NEDC) test. From September 2017, all new-to-market vehicles (new model/engine) needed to be tested under WLTP. From September 2018 all new vehicles sold will be tested using WLTP, although these figures will be recalculated back to an NEDC euqivalent figure known as NEDCc or NEDC correlated.
I'm a company car driver, what does that mean for me?
When you order a company car, you pay income tax on the Benefit in Kind value which is calculated using the vehicles CO2 emission. As is was decided that the NEDC tests are not representative of how vehicles are driven, the emisson value is incorrect. This could
|From September 2018 all new vehicles sold will need to be tested using WLTP|
mean the amount of tax you pay will differ.
I'm a business owner / fleet manager what does mean for me?
It is very important you know the emissions and fuel consumption values are lilely to change for the vehicles your business operates. Failing to monitor fuel consumption and emissions will not only affect air quality but could have a cost implication to your business.
What's the difference between the tests?
WLTP is based on a dynamic cycle which is closer to real driving conditions, whereas NEDC is based on a theoretical approach that was developed in the 1980’s and is not a true representation of driving today because of evolutions in vehicle technologies and driving conditions.
Under the new test the published CO2 may change and it can affect:
- The amount of income tax you need to pay on the BIK
- The Road Fund Licence (RFL) band and therefore the lease cost of the vehicle
- Vehicles available on the Company Car Policy if there is a cap on CO2
By how much will the NEDC and WLTP figures differ?
Currently the true WLTP results are not being published or used. Instead the WLTP results are being recalculated back to an NEDC equivalent, called NEDCc or NEDC correlated. Early data has shown that the move from NEDC to NEDCc figures increases CO2 values by an average of 10%. When the true WLTP values are published, the CO2 change is expected to be up to a 25% increase. It is anticipated that both WLTP and NEDCc figures will be published until January 2020 and pure WLTP values will be used from 2020 with the taxation values being amended to support the change.
In the future, a new test called RDE (Real Driving Emissions) will assess the pollutants when vehicles are being driven rather than in a laboratory and will complement the WLTP test. This is not currently used for assessing the CO2 emissions of the vehicle.
So what do I need to do?
This could affect existing vehicle orders and as soon as manufacturers publish their results we will work with each driver on a case by case basis. We will work with the manufacturers to ensure we have the emissions data as soon as it becomes available. For the short term there will be challenges of vehicles falling outside of drivers grades. Your company car policy may have a cap, for example 140 g/km CO2. If a manufacturer updates existing orders with new NEDCc CO2 values then these orders could fall outside of your policy when the vehicle is delivered, even though they were within the limit when they were placed. You will need to decide how to proceed with these orders. It may be worth waiting until full WLTP figures have been released before amending policies regarding CO2 limitations, providing your policy still meets your needs.
The following example shows the difference in Benefit in Kind from the published NEDC CO2 to the NEDCc CO2 taking into account the new testing methods.
|Model||BMW X3 Diesel Estate xDrive20d M Sport|
|Current NEDC CO2||138|
|Updated NEDCc CO2||144|
|RFL £515 1st year||No change|
|Updated NEDCc CO2|
|BIK Rating (New NEDCc)||33%||36%||37%|
|Annual CO2 based BIK||£14,445.76||£15,759.01||£16,196.76|
|Monthly CO2 based BIK||£1,203.81||£1,313.25||£1,349.73||Monthly Extra|
|Monthly Tax Cost 20%||£240.76||£262.65||£269.95||£7.30|
|Monthly Tax Cost 40%||£481.53||£525.30||£539.89||£14.59|
|Monthly Tax Cost 45%||£541.72||£590.96||£607.38||£16.42|
If you want to talk it through
The shift away from NEDC to WLTP and RDE can seem like quite a complex area to fully understand. That’s why our vehicle leasing experts are on hand to talk you through your options and help you make the best decision. To speak to us get in touch today.
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