Government offers tax exemptions for EVs; £30m support for low carbon vehicles in PBR
Wed 09 December 2009
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In his Pre-Budget Report, the Chancellor announced that all electric cars will be exempt from Company Car Tax for 5 years and electric vans will be exempt from Van Benefit Charge for the same period. A 100 per cent first year tax allowance will also be provided for the purchase of electric vans subject to State Aid clearance. The PBR also has news of an additional £30m to support low carbon vehicle development, including an expansion of the Technology Strategy Board's ultra-low carbon vehicles competition.
The PBR 2009 also confirms that - as announced at Budget 2009 - fuel duty will increase by one penny per litre in real terms on 1 April each year from 2010 to 2013.
As also announced in the 2008 Budget, the duty differential for biofuels will cease from 1 April 2010. The 2009 Pre-Budget Report announces that the duty differential will continue for biofuels made from used cooking oils for two years. To support the value of biofuel production, the price of 'buying out' of the Renewable Transport Fuel Obligation will increase to 30 pence per litre from 2010-11.
The Chancellor confirmed that from 2012, the CO2 emissions thresholds for Company Car Tax (CCT) bands will be shifted down by 5g CO2 per km, and the graduated table of CCT bands will be extended downwards to a new 10 per cent band for cars emitting up to 99g CO2 per km, in place of the existing 10 per cent band.
He also announced that, to support the public finances and encourage fuel-efficient travel, the fuel benefit charge multiplier will increase from £16,900 to £18,000 from 6 April 2010. The van fuel benefit charge will increase from £500 to £550 on the same date.
The Government has also announced that it is to support continued investment in transport infrastructure, including the £400 million M1 improvement scheme. The scheme will increase capacity from Junctions 10-13.
The Pre-Budget Report also announced that £400 million will be spent over the next two years "to support green growth and the development of low-carbon technologies, building on the £1.4 billion package announced at Budget 2009". This will be part-funded through a £150 million increase to the Strategic Investment Fund for low-carbon projects. These funds are to be directed at a number of sectors including boosts for domestic energy efficiency, community-level power generation, offshore wind development and decarbonising the chemicals industry in addition to transport sector priorities detailed above.
In response to the PBR, the SMMT expressed support for much of the Chancellor's statement while warning that rises in VAT and first year VED rates would directly impact on consumer demand for vehicles.
An SMMT spokesperson said: "The Chancellor identified low carbon technologies as a window to inward investment, a view supported by industry, as is the introduction of incentives for electric vehicles."
Friends of the Earth said that the UK Government's attempts to show global leadership on tackling climate change were undermined by Alistair Darling's 'woefully unambitious Pre-Budget Report'.
"With the future of the planet hanging in the balance in Copenhagen, the Pre- Budget Report was a golden opportunity for the Chancellor to demonstrate genuine global leadership in developing a low-carbon future - but he has chosen to be timid when he needed to be bold.
"Some of Alistair Darling's eco-initiatives are certainly welcome, but the economy doesn't need green tinkering - it needs a complete low carbon overhaul".
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