Budget 2013: Accelerating support for low-carbon cars

Changes to the company car tax regime announced by George Osborne in the budget include an increase in incentives for the take-up of ultra-low emission vehicles (ULEVs)

The chancellor will introduce two “benefit-in-kind” bands (0–50gCO2/km and 51–75gCO2/km) from April 2015. Under the plans, appropriate percentage of a car’s list price subject to tax in 2015/16 will be 5% for cars emitting 0–50gCO2/km and 9% for cars emitting 51–75gCO2/km.

The chancellor also revealed a further extension, until 2018, of the 100% first-year capital allowance available for businesses purchasing ULEVs. However, the emissions threshold for the allowance will reduce from 95gCO2/km to 75gCO2/km from 1 April 2015.

A full review of the emissions thresholds beyond 1 April 2018 is planned for the 2016 budget. Osborne confirmed that, in future, changes to company car taxation rates would be announced three years in advance.