The LowCVP writes to Chancellor regarding Budget tax changes for low carbon cars
Fri 15 June 2012
View all news
The LowCVP has written to George Osborne, Chancellor of the Exchequer, with regard to tax changes on low carbon cars which were announced in the last Budget.
The LowCVP is concerned that the decision to end the exemption for zero emission vehicles from company car tax and the 5% ultra-low carbon vehicle rate from 2015 sends an unhelpful signal to the market and to investors, and could promote uncertainty about the Government’s future intentions in this area.
The letter explains that the market for zero and ultra-low carbon vehicles is still very small with low volumes of vehicles in these categories so far on the road. Last year, only about a thousand vehicles eligible for the Plug-in Car Grant were registered and most of these sales were from businesses and fleets. Business buyers are particularly price sensitive and
The letter says that the UK has so far benefited significantly from the shift to low carbon vehicles and fuels and that the support offered by Government has been a key factor in attracting private sector investment in production and associated refuelling infrastructure.
The LowCVP has offered to work with HM Treasury to ensure that a supportive policy environment is maintained with the resulting benefits to UK Plc.
Since the LowCVP's letter was sent to the Chancellor, the Committee on Climate Change has stated in the transport section of its 2012 Annual Report to Parliament that: "The announcement in Budget 2012 that the company car tax exemption for zero and ultra-low emission vehicles would be withdrawn in 2015 will limit incentives for uptake in this key sector while raising only very limited revenues, and should be reversed.” (See related story.)
In a related development, it has been announced that the Treasury will be reviewing Vehicle Excise Duty bands over the coming months.
A recent report by the Institute for Fiscal Studies says that the targeted uptake of low emissions cars potentially threatens Government revenues and that the Treasury will need to find ways to remedy the shortfall by reconfiguring tax mechanisms and levels.
Related Links
< Back to news list