Government fuels ‘green’ fleet revolution with wide ranging tax and fiscal incentives

The Government has fuelled a green vehicle drive with a range of Budget 2020 announcements designed to increase the corporate take-up of zero emission vehicles.

What’s more the combination of Budget announcements – led by Chancellor of the Exchequer Rishi Sunak providing benefit-in-kind tax clarity for the next five years – is predicted to fuel increased demand for company cars from employees.

Prime Minister Boris Johnson has pledged to end the sale of new petrol, diesel and plug-in hybrid vehicles by 2040 and in all likelihood earlier, perhaps 2035 or even 2032.

Against that timeline, fleet operator representative organisations say that it is imperative that businesses and company car drivers focus on moving towards operating and driving 100% electric vehicles.

The Budget announcements would, according to the newly launched Association of Fleet Professionals (AFP) – formed as a result of the merger of both ACFO and ICFM – as well as the British Vehicle Rental and Leasing Association (BVRLA) and Society of Motor Manufacturers and Traders, support fleets and help drive the uptake of electric vehicles. They included:

  • £532 million to maintain the Plug-In Car and Van Grants until March 2023, although support for zero emission cars was cut with immediate effect from £3,500 to £3,000 per vehicle and cars costing £50,000 or more are now excluded
  • A continuation of the Workplace Charging Scheme grant, although from April 1, 2020 the amount of funding is cut from £500 to £350 per socket. However, the number of sockets allowed under the programme has been doubled from 20 to 40. The Government says that more than 6,500 workplace installations have been made to date and that cutting financial support will enable more businesses to benefit. Ministers also said that the average cost of chargepoint installations had steadily reduced since the introduction of the Scheme, so the decrease was in line with purchase prices
  • Exempting until March 31, 2025 all zero emission vehicles from the Vehicle Excise Duty ‘expensive car supplement’, which increases from £320 to £325 from April 1, 2020
  • Eliminating the Van Benefit Charge for zero emission vans from April 2021. However, in 2020/21 the van benefit charge will rise as planned to 80% of the main rate (2019/20: 60%)
  • Extending from April 2021 for four years the 100% first year capital allowance to zero emission cars only
  • Pledging £500 million to support the roll-out of a fast-charging network for electric vehicles, ensuring that drivers would never be further than 30 miles from a rapid charging station.

 Caroline Sandall, AFP joint chairman, said: “It is imperative that fleet decision-makers and company car drivers focus on moving towards operating and driving 100% electric vehicles.”

 While Gerry Keaney, chief executive of the BVRLA, said: “The Budget shows that the Government is listening and is ready to support those that are ambitious enough to embrace its decarbonisation targets.

“The Plug in Car Grant and Vehicle Excise Duty measures will play a massive role in making electric vehicles more affordable for thousands upon thousands of businesses and drivers across the UK.”

Reflecting on the raft of measures to support a ‘green vehicle drive’ and the beginnings of a market transition, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, added: “We are pleased to see the Chancellor find room in his Budget to help make zero emission motoring a more viable option for more drivers – essential if we are to begin to meet extremely challenging environmental ambitions.”

Meanwhile, the Budget Statement confirmed that previously announced benefit-in-kind tax rates for 2020/21, 2021/22 and 2022/23 would be implemented as planned and that rates for 2023/24 and 2024/25 would be frozen at 2022/23 rates.

 Paul Hollick, AFP joint chairman, said: “With company car benefit-in-kind tax rates now known for a full five-year vehicle cycle, which is the norm for some organisations, the Budget could herald a resurgence of the company car. That’s because many drivers’ decision to opt out of a ‘favourite’ employee perk was driven by tax uncertainty.”

While Mr Keaney said: “Having a roadmap for the future of company car tax up to 2025 removes the uncertainty that we know stifles business decisions.”

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