Budget 2009: Tax relief abolished on some alternative fuel cars

The government is to abolish the company car tax relief available on some diesel and alternative fuel cars.

Under changes announced in this year’s Budget, the discounts on company car tax that are currently available for Euro 4-standard diesel cars registered before 1 January 2006, higher-emitting hybrid cars and alternative fuel company cars, such as those powered by bi-fuels, road fuel gas and bioethanol, will be scrapped†

The change is intended to ensure that company car tax continues to reward cars’ final carbon emissions and is technology-neutral as new low-emitting cars are developed.

The government is also considering the case for abolishing the diesel supplement in company car tax for diesel cars that comply with the future Euro 6 emissions and air quality standards.

However, hybrid cars that emit 120g CO2/km or less will continue to fall within the 10% band of company car tax, while electric cars will still be subject to the 9% band – the lowest for any type of company car.