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Government rejects call to bring forward EV company car discount

Date: 16 January 2019   |   Author: Sean Keywood

The UK Government has received fleet industry criticism after it said it would not bring forward reduced company car tax rates for electric vehicles (EVs). 

Currently, the BIK rate for ultra-low emission vehicles is 13%, and this is due to rise to 16% in April this year, before falling to 2% in 2020.

An October 2018 report on EVs by the House of Commons Business, Energy and Industrial Strategy Committee called for the reduced rate to be brought forward to April this year, echoing the position of the British Vehicle Rental and Leasing Association (BVRLA).

The report also called for a preferential EV rate of VED to be introduced.

However, in its response to the report the Government has insisted the current position is satisfactory.

It stated: "Company car tax is explicitly designed to make it more attractive for employers and employees to choose cars which emit the lowest levels of carbon dioxide emissions. 

"As a result, a company car driver choosing a zero or ultra low emission model in 2018-19 or 2019-20 receives a significant discount compared to a conventionally fuelled alternative.

"From 2020-21, the Government will introduce five new bands for ultra low emission vehicles to distinguish between models with different plug-in hybrid technologies and improved battery range. This will focus incentives on the very cleanest cars that allow most journeys to be zero emissions. 

"There is only limited evidence to suggest that the current company car tax rates are causing drivers to delay the decision to choose ultra low emission vehicles today." 

In response, committee chair Rachel Reeves MP said: "The Government continues to fail to match its own rhetoric in encouraging people to switch to EVs.

"The Government's response to the BEIS Committee's report highlights once again the lack of ambition and vagueness of the UK Government's targets on zero-emissions vehicles." 

BVRLA chief executive Gerry Keaney said: "By failing to change the tax regime now to incentivise the uptake of electric vehicles, Government is missing the opportunity to drive change quickly.

"It is disappointing to see an ongoing lack of alignment between its taxation policy and its wider environmental ambitions."