Changes to company car tax likely

Government plans to reduce carbon emissions are almost certain to result in changes to company car tax in the Chancellor’s next budget.

The influential King Review – the second part of which will be used by the Chancellor when considering policy decisions – has indicated that tax should be used to incentivise the adoption of efficient vehicle technology.

Professor Julia King is reported as saying that there needs to be a strong signal to fleet participants to go for low CO2 emissions technology.

According to Professor King, getting the fleet industry to adopt low-carbon vehicles is critical in order to achieve the rapid introduction of these cleaner vehicles.

She said this is essential if the Government’s target of a 60% reduction in CO2 emissions is to be achieved by 2050.

Industry figures highlight that 55% of new cars go into the fleet sector so a policy that encourages the acquisition of more low-carbon vehicles will accelerate the pull through of new technology.

However, she advised that her recommendations would not be all about more tax for company car drivers as she believes in the carrot and stick approach.