In the Budget statement, Mr Osborne said: “To encourage a new generation of low emission vehicles we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20."

This follows the announcement in last year’s Budget of a 2% rise for cars emitting more than 75 gCO2/km, to a maximum of 37%, in both 2017-18 and 2018-19.

Andrew Hogsden, senior manager, fleet consultancy, at Lex Autolease, said: “The announcement that BIK rates will rise by three per cent in 2019 makes it even more important for businesses to identify vehicles with low CO2 emissions that are both fit for purpose and attractive to drivers. Fortunately companies now have considerably more choice when it comes to reducing CO2 emissions.  They should also consider new and alternative technologies, which will become increasingly available by 2019, as well as best in class traditional fuels.”   

David Brennan, CEO Nexus Vehicle Rental, added: “The news that company car tax will increase at a slower rate than planned is a welcome bonus to the businesses who rely on these vehicles to keep their operations running efficiently.”