The Autumn Statement contained measures to incentivise take-up of ultra low emission vehicles (ULEVs), by reforming the appropriate percentage banding structure used in establishing the taxable benefit for ULEV company cars and funding more development work.
The appropriate percentages for zero emission cars will be 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel.
The measure also increases appropriate percentages by one percentage point to a maximum value of 37% for cars with CO2 emissions of 90g/km and above.
The new rules will be effective from April 2020. HMRC analysis suggest there will be no impact on the Exchequer until 2020-21, when an additional £25m of tax is predicted, with an estimated £5m in 20210-2022.
Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association (BVRLA), said: ‘These new bandings will create a much greater incentive for employers and employees to choose the cleanest electric and hybrid cars. However, these decisions are pragmatic, cost-conscious ones and we are concerned that they may be deferred until the incentives come into effect.
‘The ULEV market could suffer in the meantime as company car tax costs rise significantly between now and 2019. We will continue to push the government to introduce green incentives that work now rather than later.’
The Autumn Statement also announced an additional £390m investment by 2020-21 to support ULEVs, renewable fuels, and connected and autonomous vehicles (CAVs). This includes £80m for ULEV charging infrastructure, £150m in support for low emission buses and taxis, £20m for the development of alternative aviation and heavy goods vehicle fuels, and £100m for new UK CAV testing infrastructure.
Radhika Chadwick, digital government partner at EY, said: ‘Today’s announcement will likely spur on activity in the field, but insurers and manufacturers will be keeping a close eye on how the market will evolve. Close collaboration between car makers and government will play a crucial role in unlocking the full potential of this technology.
‘Data generated from driverless cars can help to optimise infrastructure investment and enable safe, efficient operations and maintenance.
‘However, driverless cars will directly impact the volume of motor insurance claims. For insurers this poses a fundamental challenge to their pricing and products; if accidents can be minimised or almost completely removed, the question is: what are you insuring against?’
