Industry welcomes decision to revisit Budget decision on low carbon Company Car Tax rates in Autumn statement
Fri 07 December 2012
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Industry and other bodies welcomed the Chancellor's commitment in the Autumn Statement to revisit the Budget 2012 decision on Company Car Tax rates for low carbon vehicles and to look at options for continuing consumer incentives beyond 2015.
The Society of Motor Manufacturers and Traders (SMMT) said that it is fully committed to growing the UK’s low and ultra-low carbon new vehicle market, and looks forward to engaging with government to devise incentives that will progress the development and uptake of these technologies.
The British Vehicle Rental and Leasing Association (BVRLA) Chief Executive John Lewis, however, reiterated the association’s call for the leasing industry to retain its access to the 100% first-year allowances available on ultra-low emission vehicles.
“By removing the ability of the leasing industry to claim these allowances, the government will just make it more expensive for businesses to run greener fleets. There is no logic to it." John Lewis said.
In a Parliamentary Question after the Autumn Statement, former energy and climate secretary Chris Huhne asked the Chancellor what assessment he has made of the effect of changes in capital allowances announced in the 2012 Budget on the growth of the market for low carbon vehicles.
In his response on behalf of the Chancellor, Sajid Javid said: "At Budget 2012, the Government announced that it would extend the 100% first-year allowance (FYA) for businesses purchasing low emissions cars for a further two years, until 31 March 2015. The Government also announced that the capital allowances emissions thresholds would be updated in line with forthcoming European Union targets and that leased cars would no longer be eligible for the FYA.
"These changes will take effect from April 2013 and it is too early to evaluate their impact on the market for low emission cars. However, a draft tax information and impact note was published on 11 December;
"It is expected that the changes will ensure that, in the context of falling emissions, the capital allowances system continues to provide an incentive for businesses to purchase the most environmentally-friendly business cars.
"The decision not to apply the renewed FYA to leased cars is consistent with the Government's wider capital allowances policy and is designed to ensure that the FYA maximises value-for-money in terms of the environmental benefit it brings to the UK."
In other measures, the Government cancelled the 3.02 pence per litre fuel duty increase that was planned for 1 January 2013. The Government said it will move the 2013-14 increase planned for April 2013 to 1 September 2013. There will be only one fuel duty increase in 2013. For the remainder of the Parliament, subsequent increases will take effect on 1 September each year instead of 1 April.
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