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Autumn Statement: Government to re-examine BiK incentives for ultra low-emission vehicles

Changes announced in the last Budget mean that from 2015/16 an electric car with zero emissions will attract a BiK rating of 13% instead of 0%.

Meanwhile drivers of a company car with emissions of 1-75 g/km will see their tax bill rise from 5% (8% for diesel cars) to 13% (16% for diesel cars) over the same period and those at the wheel of a car with emissions of 76-94 g/km will see their tax bill rise from 10% (13% for diesel cars) to 13% (16% for diesel cars).

However today’s Autumn Statement said: ‘The Government will consider the case for providing time-limited incentives through company car tax to encourage the purchase and development of ultra-low emission vehicles, while ensuring that all company cars are subject to a fair level of taxation.

‘The Government will continue to seek the views of car manufacturers and motoring group ahead of Budget 2013.’

ACFO welcomed the news but chairman Julie Jenner said that it is critical that it is understood what the Government means by an “ultra-low emission vehicle”.

She added: ‘The increases in company car benefit-in-kind tax announced by the Chancellor in the last Budget penalise those employers and employees who have been doing exactly what the Government requested of them – choosing low-emission cars.

‘Employers and company car drivers who take on board the Government’s signals by choosing “green” vehicles need to be rewarded and not punished.

‘The Government must define what it means by an ultra-low emission vehicle – ACFO can help it do that –and then amend previously confirmed company car tax rates up to 2016/17 to encourage their uptake.

‘If that means the Chancellor performing a u-turn on benefit-in-kind tax thresholds already announced in relation to electric cars and other vehicles with emissions below a certain threshold then that should happen at the earliest possible opportunity.’

Meanwhile, BVRLA chief executive John Lewis reiterated the association’s call for the leasing industry to retain its access to the 100% first-year allowances available on ultra-low emission vehicles.

‘We are due to meet with the HM Treasury officials this month and will remind them that all the benefits of these allowances would continue to flow through to business end-users, as they do now.

‘By removing the ability of the leasing industry to claim these allowances, the government will just make it more expensive for businesses to run greener fleets. There is no logic to it.

‘As the vehicle leasing industry trade body you could say that we are biased, but the Committee on Climate Change, the Transport Select Committee and LowCVP are all in agreement.’ 

With a raft of changes to the business car tax regime due next April, the BVRLA has also urged the Treasury to provide full details of all transitional arrangements in the draft Finance Bill due to be published on 11 December.

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.

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