26 March 2012

Far too many years of covering Budget speeches should have taught me there’s no point in actually listening to what the Chancellor (of any party) has to say. You have to get hold of the full Budget Report to find out what’s really going to happen.

That’s where you discover a “simplification” of the tax system for pensioners is actually a raid on their tax-free allowances or “easing the burden on motorists” actually means putting up fuel duties.

And that’s where you discover the Government appears to be doing a massive U-turn on its policy toward electric and ultra-low carbon cars. Remember, these are the cars that they are currently encouraging us to buy with a £5000 incentive grant.

And here’s what the Treasury document actually says on company car tax rates:

“From April 2015, the ?ve-year exemption for zero carbon and ultra-low carbon emission vehicles will come to an end. The appropriate percentage for zero emission and low carbon vehicles will be 13% from April 2015 and will increase by two percentage points in 2016/17.”

What it means is: from 2015, electric cars and plug-in hybrids – such as the Nissan Leaf, Renault Fluence and upcoming Vauxhall Ampera – are going to be treated for company car tax purposes like any other car.

So, by 2016 I’m going to be paying BiK tax at a rate of 15% on a £30k-plus plug-in or, let’s say, 16% on a conventional sub-99 gm/km hatchback costing half the price. Bit of a no-brainer, really.

Here’s what John Lewis, chief executive of the BVRLA has to say:

“By eliminating their company car tax exemption from April 2015, the Chancellor is getting rid of one of the main incentives for fleets to operate them. This measure could kill the electric car market stone dead.”

Fleet operators (realistically the only volume customers for over-priced low carbon cars) will remember the Government’s previous U-turn on LPG. Unless there is a change of heart, the electric car market has just been strangled at birth.

Rupert Saunders

Got a point to make? Email me at rupert@auto-retail.com

Tags: benefits, Budget, company cars, electric cars, grant, tax levels