George Osborne has announced that the Government will “support the manufacture of new low emissions vehicles in Britain with new tax incentives” in this afternoon’s Budget.

He has confirmed two new company car benefit-in-kind bands for low-emission vehicles, one for 0-50g/km CO2 emissions, and another from 51-75g/km.

Rather than jumping straight from current levels of no BIK at all for zero tailpipe emission vehicles and 5% for 1-75g/km to 13% in 2015/16, as was proposed in the 2012 Budget, vehicles under 51g/km will enjoy a 5% band in 2015/16 and 7% in 2016/17, while those between 51-75g/km will have a 9% band in 2015/16 and 11% in 2016/17.

For the following year, the Government has confirmed sub-51g/km vehicles will be three percentage points lower than the 51-75g/km group, which will in turn be another three below 76-94g/km band, and the gaps will narrow to two percentage points for the tax years 2018/19 and 2019/20 confirming the key emissions points until the end of the 2020 tax year.

The Government has pledged to announce company car tax rates three years in advance, so the specific percentage bandings rates for the tax year 2017/18 will be announced in next year’s Budget.

Budget 2016 will bring a review of the incentives for ultra-low emissions vehicles, at which point the Government will take into account market developments, with changes coming in the 2020/21 tax year.