Mike Moore, a director in the employment taxes group at Deloitte, said: 'There was welcome news for company car schemes in today’s Budget. The percentage of vehicle list price subject to company car tax will be halved for five years from 6 April 2010 for ultra-low carbon cars emitting between 1 and 75g/km. For petrol cars, this indicates that the relevant percentage will be 5%, however, clarity is required on how a diesel car will be treated. The relevant percentage for a diesel car could be 5, 6.5 or 8%, depending on the interpretation of the statements in the Budget Notes, although 8% is the most likely.

'Further incentives for the selection of lower CO2 cars are a welcome initiative from the Chancellor. Whilst there are no cars currently available in this group, and not expected to be for at least six months, the pace of manufacturer emissions reductions mean that there are likely to be options available before the incentive period ends on 5 April 2015.'

John Lewis, chief executive at the BVRLA, agreed that this is more an incentive that will be of benefit in the future.

He said: 'The Chancellor’s decision to halve company car tax for ultra-low carbon cars is a nice gesture that probably should have been made in the Pre-Budget Report. This is definitely an incentive for the future – company car drivers will struggle to find a suitable ultra-low carbon car at the moment.'