Zero and low emission cars and vans
The measure
Company cars and vans will no longer attract an income tax charge if they have zero CO2 emissions (eg electric vehicles). Hybrids which can run on electricity or petrol/diesel will not qualify for the exemption.
In addition, petrol cars emitting 75g of CO2 per kilometre or less will attract a reduced chargeable benefit of 5% of their list price. Ultra-low emission diesel cars will still be subject to the 3% surcharge, making the chargeable benefit for diesel cars 8% of list price.
Reduction and abolition of company car and van benefits will also reduce Class 1A National Insurance liabilities for employers.
Who will be affected?
Employees provided with a zero emission car or van, or an ultra-low emission car.
When?
The exemption is a temporary measure and will have effect from 6 April 2010 to 5 April 2015.
Tax incentives for electric cars and vans should further encourage employers to provide these vehicles and, in turn, encourage a wider variety of such models to be made available in the UK.
We welcome further incentives for the selection of cars with lower CO2 emissions. Whilst there are currently no cars generally available in the ultra-low group of up to 75g/km and none are expected within the next six months, the pace of manufacturers reducing emissions means that there are likely to be options available before the incentive period ends. However, we would expect these cars to have diesel engines, attracting an 8% charge on list price.
