Thursday, 10 December 2009

Electric cars to be spared company-car tax for five years

Philip Pank, Transport Correspondent

Electric cars will be exempt from company car tax for five years from April and electric vans will be spared capital tax payments.
More money will also be made available for the road testing of electric cars. The Government hopes that the scheme will help to overcome a shortage of electric car charging points.
Because of the small numbers of electric vehicles on the road, experts believe that the measures anounnced yesterday will have a limited immediate impact. They see them as incentives designed to encourage greater green motoring in the years ahead.
Before electric cars can make a real impact on travel in Britain, a proper charging grid or battery-lease network will have to be put in place. Existing electric cars do not offer a realistic alternative for long- distance or family travel.

From April all electric vans will be spared a flat-rate £3,000 tax. However, the Department for Transport notes that there is no mass-market electric van available.
There are a mere 50 electric company cars on the British road network. At present, they pay 9 per cent of standard company car tax. The average company car tax is £350 so the total cost to the Exchequer of implementing this measure will be £1,575. But Treasury officials hope that the announcement will act as an incentive to increase the number of electric cars.
There are one million company cars on the road. Electric cars account for just 0.1 per cent of the 26 million cars in Britain.
“Obviously in the short term there will be very few takers for this,” said Edmund King, the president of the AA. “However, you need incentives and at least this has a decent time scale on it.”
The Pre-Budget Report pledged £30 million for green transport projects, including an extension of a programme that allows members of the public to test electric cars for an extended period. Feedback from drivers will be used to overcome the shortcomings of the vehicles.
Motoring organisations were relieved that the Chancellor refrained from bringing forward the 1p fuel duty increase that is due in April. However, they noted that the return to 17.5 per cent VAT in January would add 2.36p to a litre of unleaded petrol and 2.4p to a litre of diesel.