Autumn Statement 2012: The government will consider providing incentives through company car tax to encourage the purchase and development of ultra-low emission vehicles.
In his Autumn Statement today, chancellor George Osborne says the government will seek the views of car manufacturers and motoring groups ahead of the Budget 2013 as he considers the validity of an incentive programme, while ensuring that all company cars are subject to a fair level of taxation.
The current car road tax rate for petrol and diesel cars registered after 1 March 2001 starts at £20 per annum for cars with CO2 emissions of between 101 and 110g/km, increasing to £475 for cars with emissions over 255 g/km. Cars with emissions of up to 100 g/km are exempt from the duty (see box).
Salary sacrifice car schemes are a popular feature of a number of employers’ employee benefits packages, and are attractive because of the tax and national insurance (NI) breaks they can offer both employees and employers.
Alison Argall, business development director at Tusker, said: “Tusker are delighted to see the government continue to support the promotion of low carbon emitting vehicles. We have seen significant increased take up of ‘green’ cars over the past couple of years, which additionally provide further fuel efficiencies to our company car drivers, as well as reducing our customers carbon footprint.”
Andrew Leech, director at Fleet Evolution said: “Hopefully this will be good news for the industry following the recent changes to the tax treatment of electric cars which has stifled orders.
“The hybrid market has been vibrant for some time and with the more recent additions of models such as the DS5 hybrid and Mercedes E300 we would expect the detail to reward drivers choosing such low CO2 options.
“The recent trend however appears to be to limit the largest advantages to vehicles with emissions lower than 75 grams/km and the options for the company car driver within these limits are severely restricted when you consider the high list price of electric cars and the 2015 company car tax changes.
“As with all changes the ‘devil’ will be in the detail but like other changes we would expect manufacturers to respond swiftly if not be ahead of the game when any formal announcement is made.
“The electric car point is a very valid one, the government spent a lot of time promoting electric, they introduced a regime where high list price cars where subsidised and with the recent proposed changes this will heavily penalise their drivers from April 2015. We’ve seen interest fade significantly and now only promote them as 2 year deals. Whatever the government do it needs to be a long term strategy with the rules defined for the long term. “