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What Is WLTP and Why Has Your Car Tax Increased?

Most drivers experienced an increase in their annual car tax bill on April 1, 2020. The more cynical would suggest that this was simply a way for the government to gather more shillings for the national coffers. However, officially, the change reflects a new way of measuring carbon dioxide emissions. What has changed and why are CO2 emissions relevant when it comes to your road tax?

Emissions-based

The UK government operates an elaborate vehicle excise duty scheme. The majority of drivers need to pay a set amount each year based on (usually) the car's environmental efficiency. Certainly, some people who own older vehicles may pay road tax in the UK based on the engine's cubic capacity. However, anyone who buys a new car will need to account for its emissions producing capability.

The tax rate is different when a car is brand-new and while the rate charged has related to emissions since 2001, changes brought in at the beginning of April 2020 now focus on WLTP fuel economy tests. This change is quite significant, and most drivers will need to pay more as a consequence.

Shrinking the Footprint

The UK government is committed to environmental stewardship, and politicians have set some heady goals to reduce the country's footprint. While regulators want to get rid of new vehicles powered by the internal combustion engine altogether, they will increasingly penalise those who choose to buy less efficient cars. 

WLTP protocols will push most new vehicles into a higher car tax band due to the latest figures. Again, politicians hope that this will encourage people to buy battery electric vehicles instead of paying higher car tax on a new car. After all, these vehicles are exempt from vehicle excise duty altogether.

If you need additional proof of the government's intent, and a further incentive to buy an electric car, say goodbye to the "luxury car" supplement as well. People who buy a new electric vehicle from April 1, 2020, will no longer need to pay the £325 supplement per year. Previously, they would need to pay this supplement each year from the second until the sixth anniversary of ownership.

Old Versus New

Before the WLTP, there was NEDC.  The "New European Driving Cycle" was the gold standard and meant to record the fuel economy and standard emissions level for each passenger car. Technicians would drive each vehicle over four different urban driving cycles and one "extra-urban" cycle. During these tests, they measured fuel consumption and CO2 emissions, but critics suggested that the process was too standardised and did not consider performance in real-world conditions.

Today, however, all vehicles sold in the United Kingdom need to conform with the World Harmonised Light Duty Vehicles Test Procedure (WLTP). This is now the main vehicle homologation procedure. It should tie together laboratory or design estimates for emissions and fuel consumption with results from the real world.

How Does WLTP Mimic Real-World Testing Conditions?

While the old test would focus on three urban and one extra-urban test, the new protocol offers a much more extensive range of driving situations. Testers will now drive each vehicle on town centre streets, suburban roads, A-roads and motorways. They will also drive each car over a greater distance to gather even more realistic data.

The technicians will also put each vehicle through its paces in a dynamic environment. They will conduct spontaneous acceleration and deceleration tests to replicate everyday road use. On other occasions, they will aim for maximum engine power or speed in certain circumstances, and maintain higher averages.

Some of the key changes brought about by a switch to WLTP:

  • the testing cycle has increased from 20 minutes to 30 minutes,
  • the distance covered by the cycle has increased from 11 km to more than 23 km,
  • the average speed threshold has increased by one third to 46 km/h,
  • the maximum speed is now 131 km/h instead of 120 km/h,
  • technicians can now shift gear at different points for each vehicle,
  • the ambient temperature for each test must be close to 23°C.

Marketing

Car manufacturers market a range of different variants for each model, and these new tests will take that into account as well. If optional equipment is available, they will fit this to the vehicles and record fuel consumption or CO2 differences as found. They will then provide this information to the manufacturers or dealer networks so they can generate marketing materials. This data will enable each customer to make the most appropriate decision as they check their car tax obligation.

Realism

The regulators are nevertheless at pains to point out that these tests are not foolproof. While they will undoubtedly provide more realistic "real-world" data, there may still be a significant difference between expected emissions and those you may find in everyday use.

Phased Introduction

The UK government decided to base vehicle excise duty on WLTP figures back in 2017 but did not introduce the changes until April 2020. The stated aim is to provide consumers with more accurate information so they can determine the environmental impact of any new car. Clearly, the government would like to make a significant dent in the 90% of greenhouse gas emissions related to road transport across the UK.

Moving up a Bracket

Based on car manufacturer data, more than 50% of new cars are affected, which means their registered emissions have increased by as much as 20%. This rise will push the said vehicle into a different car tax bracket and increase vehicle excise duty.

Extra Tax Take

Government accountants expect to raise an additional £200 million per year from this initiative. They also hope to bring in £400 million per year through other NI and income tax contributions, related to company car use.

Don't Forget to Register

In the government's eyes, everyone should consider buying an emissions-free vehicle. If you intend to do so, don't forget that you still need to register with the DVLA and apply for the annual exemption, even though you won't have anything to pay.

In Closing

Of course, nobody knows how the Chancellor will react as more and more people choose to go down the EV route. Eventually, the Treasury will take a significant hit, and you shouldn't be surprised if this leads to new and more inventive taxes elsewhere.