Company car tax to get low emission overhaul

The government is considering reforms to company car tax to incentivise ultra-low emission vehicles, while forward-thinking companies have been celebrated for their low emission fleet commitments.

To reflect the increasing popularity of ultra-low emission vehicles (ULEVs), the government is seeking views on how to refocus company car tax and incentivise a step-change in uptake over the next decade. 

The rapid development of new technologies and vehicles is starting to make the current tax banding structure look dated.

Tax bands

Currently, ULEVs are separated into two bands, covering emissions of 0-50g CO2/km and 51-75g CO2/km.

There are already at least 29 models currently on the market within these bands, with ever widening gaps in performance and environmental impact. 

To reflect this, the government is considering introducing new bands from 2020 based on the number of ‘zero emission’ miles each vehicle is capable of. 

The tax rate for the next four years is already set, with the rate for ULEVs significantly lower than for other vehicles.

Electric progress

The government’s announcement comes as new figures suggest that new diesel cars are still emitting many times the official limits, a year on from the VW emissions scandal

Meanwhile, electric and other low emission vehicles continue to make significant progress. 

Research from the US suggests that the vast majority of regular car journeys can now be completed by electric vehicles on a single charge, while carmaker Nissan predicts that electric vehicle charging stations will outnumber petrol stations in the UK by 2020.

Government endorsement

The government-backed Go Ultra Low campaign, which promotes ULEVs to consumers and businesses, has now awarded the ‘Go Ultra Low Company’ status to 65 organisations in the UK. 

The organisations have been given the government-endorsed status in recognition of their commitment to make at least 5 per cent of their fleet electric by 2020.

Poppy Welch, head of Go Ultra Low, said: “The response to the Go Ultra Low Companies scheme has been excellent from both the private and public sectors, ranging from small businesses to an 800-year-old university.

“This eclectic mix of Go Ultra Low Companies is setting an example for the rest of the UK. With more and more electric vehicles now available, we encourage every organisation and fleet to consider switching to electric.”

The government’s consultation on company car tax closes on 19 October 2016. For more information, click here.

Posted under Carbon Reduction, Fuel Efficiency and Environmental Regulations and Legislation on 5 September 2016