Government support for fleet uptake of ultra-low emission vehicles is to be applauded but better use needs to be made of the company car tax regime.

Changes to the Benefit in Kind system from 2020 will prioritise vehicles more likely to be driven on electricity

That’s the view of the BVRLA which has welcomed new company car tax incentives for ULEVs from 2020 but said that implementing them sooner could significantly drive fleet take-up of such vehicles.

In last month’s Autumn Statement, the Chancellor promised a new, more granulated range of company car tax bandings for ULEVs from April 2020. In that month, the appropriate tax rate for zero emission cars will drop from 16% to 2%. This could cut a basic rate taxpayer’s company car tax bill by around £70 per month, or save a higher rate taxpayer up to £1401.

Other moves announced included support for workplace charging and the retention of salary sacrifice tax advantages for ULEVs.

“It is great to see that the Government now has a more comprehensive strategy on ultra-low emission vehicles, which recognises the huge role played by the fleet sector,” said BVRLA chief executive, Gerry Keaney. “The company car tax regime is the single most powerful tool policymakers can use to drive behaviour change, but it is not being used effectively.

“By signposting these tax incentives but delaying them until 2020, the Government could encourage thousands of pragmatic, cost-conscious drivers to defer the move to low emission motoring.

“Our cities are facing an air quality crisis and the Government is in danger of missing its longer-term CO2 targets. The Mayor of London and the Environmental Audit Committee have both called for greater government action on road transport emissions now, not in 2020,” added Keaney.

As well as calling for the introduction of new company car tax bandings to be brought forward, the BVRLA is also urging HMRC to make a decision on what Advisory Fuel Rates (AFRs) will apply when electricity is used as a fuel type.

Elsewhere, the association has welcomed the clear ‘green light’ given to ULEVs for salary sacrifice car schemes in the Autumn Statement, which will see vehicles under 75g/km exempted from new tax rules coming into effect in April 2017.

“Salary sacrifice schemes are an extremely valuable employee benefit and the certainty provided by the Autumn Statement means this won’t change,” said Keaney.

“ULEVs will continue to receive the full savings and advantages of these and other car benefit schemes and we expect the demand for this kind of car to surge thanks to the government support provided via the Plug-in-Car Grant and tax incentives for workplace charging.”