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Better in the old days. Really?
17 May 2012

Remember 2002? I have to admit, I was still in shorts at the time but my fellow directors tell me about it…

Sorry. That was uncalled for.

Anyway, 2002: a freeze frame in the company car tax time line. It was that seminal moment when we moved from the sub-£20k company car special, when tax was all about price points, and onto company car tax based on CO2 emissions.

If you were a smart company car driver you headed for the dealership marked 'Volkswagen' and put your moniker next to a Passat SE. A diesel one. Your mates scoffed and carried on swanning around in petrol cars, but come that first wage slip you looked smug while your work colleagues blanched and decided they wouldn't be joining you for a beer after work…

The VW Passat TDI was ahead of the game in 2002 and if you understood the new rules on company car tax, it put you ahead of the game too.

OK, fast forward to 2012. Not quite the same massive change in company car tax policy that we saw in 2002 (well, some of us saw in 2002!) but no doubt some company car drivers were wondering why their take home pay had shrunk.

Sometimes it's worth taking stock of where we are and where we've come from to understand our current position better.

The disappearance of the qualifying band for low emission cars – 10% for petrol, 13% for diesel – and a reduction of 5% in the banding structure meant that some drivers saw their low 13% company car tax vehicle suddenly shooting up to 16%.

Now, given the current economic climate, that really isn't much fun and just adds to the sense of the ever tighter squeeze on personal finances.

But we've been tapping the calculator buttons here at Fleet Alliance HQ to really understand the impact of all this. And how do I put this? In real terms the company car tax on a Passat is cheaper now, than it was then!

Now, I fully understand your sense disbelief – the fact that you've just slammed down your coffee cup, muttered something unrepeatable and decided never to bother reading this blog again – but, but, but... Hold on.

Let's go back to 2002 and that Passat again. The 2.0 SE diesel had a P11D value of £17,335 with CO2 emissions of 154g/km which gave rise to a benefit in kind value of £3,120. Adjust that figure for 3.2% inflation over the last 10 years – and the BIK value would be £4,193 in today's terms. With me?

Now, compare that with today's Passat 2.0D SE. Although the P11D price of £22,355 has risen rather more than inflation – 29% actually – the CO2 emissions have dropped dramatically to just 119g/km giving rise to a BIK value of £3,800: less than the inflation adjusted figure of 10 years ago.

Of course, none of this maths makes it any better for drivers squeezed by price rises and a sudden reversal in take home pay.

But sometimes it's worth taking stock of where we are and where we've come from to understand our current position better – and that's some distance over 10 years.

Back when I was a kid…

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