The VW emissions fiasco

Many owners of VWs will be peeved that they may have been misled if the recent revelations regarding published CO2 levels are confirmed: they will be driving cars that are not as environmentally friendly as they were led to believe.

 VW have admitted that as many as 1.2m of its vehicles sold in the UK have been fitted with software that cheated emissions tests.

 It is likely that the CO2 ratings of the affected vehicles will be increased, and the Treasury has recently announced its reaction to the issue.

Benefit in kind tax is based on the list price of a vehicle when new and the CO2 rating. If the engines are diesel powered there is also a 3% surcharge. Accordingly, if the CO2 numbers increase, so too will the company car driver’s Income Tax charge. However, HMRC have confirmed that no one will pay extra tax as a result of this scandal. See quote from the Transport Secretary below. In theory, HMRC could recalculate benefit in kind charges for previous and future years on the basis that the percentage benefit used was understated. Fortunately, common sense has prevailed.

Transport Secretary Patrick McLoughlin said:

'Our priority is to protect the public and give them full confidence in diesel tests. The Government expects VW to support owners of these vehicles already purchased in the UK and we are playing our part by ensuring no one will end up with higher tax costs as a result of this scandal.'