Accessibility Page Navigation
Style sheets must be enabled to view this page as it was intended.
Print Header
Home >  News >  Government Legislation on low emmision vehicles set to increase costs

Government Legislation on low emmision vehicles set to increase costs

News Eco

From 6th April 2012, there will no longer be a Qualifying Low Emission Car (QUALEC) category of vehicle. It is now time to prepare and understand the possible increases in costs as these changes apply to all cars on the road, not just cars ordered in the 2012 tax year.

What is QUALEC?

A QUALEC is a car first registered on or after 1st January 1998 with a CO2 emissions figure below a given limit , currently 120g/km. For vehicles with CO2 emissions below this, the percentage used for calculating company car tax is 10% (with the exception of vehicles who have a CO2 of 75g/km or less where the percentage is 5%, and vehicles who have zero emissions where there is no charge.)

What does this mean?

QUALECs will no longer exist from 2012 and this will result in:

  • An increase in the scale charge on all vehicles with CO2 emissions between 100g/km and 120g/km.
  • Employers will see an increase in Class1a NI costs on the scale charge of cars with CO2 between 76g/km and 120g/km
  • Drivers of vehicles with CO2 between 76g/km and 120g/km will see an increase in BIK tax.

What should I do?

If you run a fleet with vehicles with a CO2 of sub 120g/km, it is important to understand the effects of the changes on your Class 1a NI costs.

Currently all cars with CO2 between 75g/km and 120g/km benefit from the QUALEC rate of 10% for petrol (13% for diesel) but from 2012~13 tax year, cars in this bracket will attract a larger scale charge and associated Class 1a NI cost, with cars that currently fall into the bands with CO2 110 - 114 and 115 - 119 being particularly adversely affected.

In addition, where whole life cost benchmark entitlements have been set using sub 120g/km CO2, it is worth reviewing the effects of the change to allow for adjustments to be made to policy as appropriate.

Drivers choosing a new vehicle should consider their costs over the duration of their contract as a sub 120 CO2 vehicle will cost more in tax from 2012-13.

Both the increase to Employers NI and employees BIK will impact on all cars that are currently on order, or will be with a driver from the start of the 2012 tax year, so it is important that fleets and drivers understand and plan for any likely increases in costs.