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. “
This is welcome news it comes across a back cloth of very limited sales of low emission vehicles and I hope the announcement will start to get lessors seriously interested in getting these cars into fleet. I recently contacted 3 lessors for a quote on an electric car for a client and they said they did not offer
It is good news that the government is reviewing their stance on the benefit-in-kind taxation of electric cars. The removal of tax breaks for electric cars in the 2012 budget, to take effect from April 2015, was counterproductive. There has been significant investment in the research and development of electric cars. It is still very early days in the introduction of the new breed of electric cars to fleets and businesses have not yet had time to get comfortable with them.
At Zenith, we are currently trialling electric cars and have had some very positive feedback. For certain types of journeys we believe electric cars have a very positive future, provided they are cost effective. A lot of uncertainty is around fear of change. However, our initial feedback shows that most users are pleasantly surprised by the benefits they have received from driving an electric car and almost half would definitely or possibly consider exchanging a car in their household for an electric one. If alternative fuels are to be a viable option and gain support, then incentivisation needs to continue.
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