Budget 2014 gives support for ultra low emission company cars; incentives for zero emission vans and low carbon fuel
Wed 19 March 2014
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The Chancellor has announced changes to Company Car Tax which will mean that a discount for Ultra Low Emission Vehicles (ULEVs) will be extended beyond 2016-17. In Budget 2014, there is also encouragement for the zero emission vans and for the uptake of methanol as a transport fuel.
From April 2015, two new Benefit in Kind (BIK) bands will be introduced at 0-50g/km and 51-75 g/km CO2. The appropriate percentage of the P11D price subject to tax for the 0-50 g/km CO2 band will be 5% in 2015-16, and 7% in 2016-17. The percentage subject to tax for the 51-75g/km band will be 9% in 2015-16 and 11% in 2016-17.
CCT will increase by 2 percent for cars emitting more than 75 grammes of carbon dioxide per kilometre (g/km CO2), to a maximum of 37%, in both 2017-18 and 2018-19. In 2017-18 there will be a 4 percent differential between the 0-50 and 51-75 g/km CO2 bands and between the 51-75 and 76-94 g/km bands.
In 2018-19 this differential will be cut to 3 percentage points. The differential will be cut further to 2 percent in 2019-20 in line with the Budget 2013 announcement.
From next April, the Government has extended Van Benefit Charge (VBC) support for zero emission vans to 5 April 2020 on a tapered basis (it had been due to expire this year). In 2015-16 the VBC rate paid by zero emission vans will be 20% of the rate paid by conventionally fuelled vans, followed by 40% in 2016-17, 60% in 2017-18, 80% in 2018-19 and 90% in 2019-20, with the rates equalised in 2020-21. The Government says that it will review VBC support for zero emission vans in light of market developments at Budget 2016.
The Budget also introduces fuel duty incentives for methanol. From April 2015, the Government will set the methanol duty rate at 9.32 pence per litre. The size of the duty differential between the main rate and methanol will be maintained until March 2024. The Government says that it will review the impact of this incentive alongside the duty incentives for road fuel gases at Budget 2018.
Commenting on the changes, LowCVP Managing Director Andy Eastlake said: "It's encouraging to see that the Government is willing to support the uptake of an innovative low carbon fuel through the tax system and to support these fuels in the long-term.
"Other measures provide further signals, to fleet managers in particular, that there are cost savings to be had through the active adoption of the lowest carbon vehicles.
"There are plenty of opportunities to strengthen incentives for ULEV uptake but these are moves in the right direction."
Amongst other announcements, the Chancellor confirmed that the fuel duty rise originally planned for September will not take place.
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