The BVRLA has welcomed Government’s attempts to support fleet uptake of ultra-low emission vehicles but attacked the strategy of delaying ULEV tax incentives for four years as stalling the industry’s green advance.
In last month’s Autumn Statement, the Chancellor unveiled a number of measures aimed at boosting the emerging market for cars emitting less than 75g/km CO2, including support for workplace charging and retaining salary sacrifice tax advantages for ULEVs.
Company car tax bands 2016-2020
- Click here to see how benefit in kind rates will rise – and finally fall for ULEVs
But benefit-in-kind tax bands keep rising until 2019/20 until the big drop in 2020/21.
BVRLA chief eExecutive, Gerry Keaney said: “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.
“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.”
Keney added: “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.”
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.
With the Chancellor’s promised new, more granulated range of for ULEVs from April 2020, the appropriate tax rate for zero emission cars will drop from 16% to 2%. On something like a Nissan Leaf 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 £140.
Elsewhere, the association has welcomed the clear ‘green light’ given to salary sacrifice car schemes in the Autumn Statement. The government recognised the huge role these schemes play in providing employees with clean, safe and cost-effective transport and provided and decided to exempt them from new tax rules coming into effect in April 2017.
The exemption applies to ULEVs emitting less than 75g/km of CO2 and BVRLA members offering salary sacrifice schemes have embraced the new regime.
“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.”
The government has said that it will protect any existing employer-provided car arrangements made before April 2017 and that this protection will last until April 2021. The BVRLA’s understanding is that ‘arrangement’ refers to any contract agreed between an employee and employer.