From April 2015, two new CCT bands will be introduced at 0-50 grams/kilometre of carbon dioxide (g/km CO2) and 51-75 g/km CO2.

The appropriate percentage of the list price subject to tax for the 0-50 g/km CO2 band will be 5 per cent in 2015-16, and 7 per cent in 2016-17. The appropriate percentage of the list price subject to tax for the 51-75 g/km CO2 band will be 9 per cent in 2015-16 and 11 per cent in 2016-17.

In 2017-18 there will be a 3 percentage point differential between the 0-50 and 51-75 g/km CO2 bands, and between the 51-75 and 76-94 g/km CO2 band.

In 2018-19 and 2019-20 there will be a 2 percentage point differential between the 0-50 and 51-75 g/km CO2 bands and between the 51-75 and 76-94 g/km CO2 bands.

In future years company car tax rates will be announced three years in advance. The Government will review these incentives for ULEVs in light of market developments at Budget 2016, to inform decisions on CCT from 2020-21 onwards.

Roddy Graham, commercial director of Leasedrive and chairman of the ICFM, said: ‘The U-turn on tax incentives for ultra-low vehicle emissions is to be welcomed although a zero tax would have encouraged more to go down the EV road.'