Following concerns expressed by the automotive industry, the Chancellor has reintroduced tax incentives for ultra-low-emission company cars by creating two tax bands for vehicles with tailpipe CO2 emissions of 0-50 g/km and 51-75 g/km. Even better, this means that they will not be directed at a particular technology (electric vehicles) as they were previously, but be technology-neutral.
Furthermore, he has announced that Company Car Tax rates will be announced three years in advance. This is great news for fleet operators since the average length of ownership of company cars is 3 to 4 years; under the new regime, operators will therefore have longer-term certainty when making vehicle purchasing decisions.
This is the relevant section in Budget 2013:
2.152 Company Car Tax (CCT): ultra low emission vehicles (ULEVs) – From April 2015, two new CCT bands will be introduced at 0-50 grams/kilometre of carbon dioxide (g/km CO2) and 51-75 g/km CO2. (Finance Bill 2013)
2.153 The appropriate percentage of the list price subject to tax for the 0-50 g/km CO2 band will be 5 per cent in 2015-16, and 7 per cent in 2016-17. The appropriate percentage of the list price subject to tax for the 51-75 g/km CO2 band will be 9 per cent in 2015-16 and 11 per cent in 2016-17. In 2017-18 there will be a 3 percentage point differential between the 0-50 and 51-75 g/km CO2 bands, and between the 51-75 and 76-94 g/km CO2 band. In 2018-19 and 2019-20 there will be a 2 percentage point differential between the 0-50 and 51-75 g/km CO2 bands and between the 51-75 and 76-94 g/km CO2 bands. (Finance Bill 2013 and future finance bills) (57)
2.154 In future years CCT rates will be announced three years in advance. The Government will review these incentives for ULEVs in light of market developments at Budget 2016, to inform decisions on CCT from 2020-21 onwards.