Budget 2013: The Chancellor George Osborne has announced a new, ultra low emission company car tax.
The company car tax (CCT): ultra low emission vehicles (ULEVs) will come into effect on April 2015.
There will be two new CCT bands which will will be introduced by the government at 0-50 grams/kilometre of carbon dioxide (g/km CO2) and 51-75 g/km CO2:
- The appropriate percentage of the list price subject to tax for the 0-50 g/km CO2 band will be 5% in 2015-16, and 7% in 2016-17.
- The appropriate percentage of the list price subject to tax for the 51-75 g/km CO2 band will be 9% in 2015-16 and 11% in 2016-17.
In 2017-18 there will be a three percentage point differential between the 0-50 and 51-75 g/km CO2 bands, and between the 51-75 and 76-94 g/km CO2 band.
In 2018-19 and 2019-20 there will be a two percentage point differential between the 0-50 and 51-75 g/km CO2 bands and between the 51-75 and 76-94 g/km CO2 bands
In future years CCT rates will be announced three years in advance.
The government will review these incentives for ULEVs in light of market developments at Budget 2016, to inform decisions on CCT from 2020-21 onwards.
Alastair Kendrick, director of Macintyre Hudson, said: “The announcement today means that if you want a low emission car, you really are not going to get the same deal if you try and lease, opposed to buying a company car, because the leasing companies aren’t going to get a tax break.
“The government is saying that ‘we really don’t want employers to rent low emission cars because we’re not giving them the tax break if they lease them’.”
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