Pre-Budget report: Government backs greener fleets

Chancellor Alistair Darling has announced plans to increase the number of electric cars on the streets by exempting them from company car tax for five years.

In his pre-Budget report, he also announced a 100% first year capital allowance for electric vans.

Darling said the plans were a key component of the government’s growth strategy of investing to keep goods and people moving.

He also confirmed that as of April 2012 the 10% band for company car tax will apply to vehicles emitting 99g/km or under, with tax rising in increments of 1% per 5g of CO2. †As expected, this update in taxation will continue to encourage manufacturers to develop lower emission vehicles.

Mike Moore, a director in the employment taxes group at Deloitte, commented: “This should provide a further incentive for employers to assess their current fleet policy and its true after tax cost and ensure they maximise the use of the tax incentives provided by the government.”