Government plans to drive the UK electric vehicle market will “lose momentum” unless a fairer and well-signposted company car tax regime is adopted.

Gerry Keaney, chief executive, BVRLA

So says the BVRLA as it urges the Chancellor to use the Budget to energise the take up of plug-in electric vehicles and support the vital role played by the company car.

The association pointed to the Prime Minister’s announcement at last month’s inaugural Zero Emission Vehicle Summit in Birmingham for the UK to become a global centre of excellence for electric vehicles. It follows ambitious aims set out in the ‘Road to Zero Strategy.

However, the Government’s current approach to company car tax undermines this, according to the BVRLA.

Current plans would see the company car tax Benefit-in-Kind (BIK) rate for electric company cars soar to 16% in April 2019 before dropping to 2% the year after, actively disincentivising the take-up of these cars.

By bringing forward the 2% CCT rate for zero emission vehicles, the Government could provide a much-needed stimulus to the electric vehicle market, which is currently growing at less than 4% per year.

“We welcomed the ‘Road to Zero Strategy’ and our industry responded by issuing its own ‘Plug-in-Pledge’, which would see its electric and plug-in hybrid fleets grow to 720,000 by 2025,” said BVRLA chief executive, Gerry Keaney.

“The majority of these vehicles will be company cars and businesses can only deliver this huge move to zero-emission if they have an enabling tax environment. Taxing electric cars at 16% is madness.”

Plug-in vehicles are not yet appropriate for all trips and the BVRLA is also calling for the Treasury to support the use of low-emission petrol and diesel company cars. The average company car emits 11% less CO2 than the average personal lease car and 19% less CO2 than the average grey fleet car.

The association has asked the Government to address the introduction of the new WLTP (Worldwide Harmonised Light Vehicles Test Procedure) emission standard, which could see some CCT BIK rates increase by as much as 30%.

“The tax burden on company car drivers has already risen by £1bn over the last five years,” said Keaney.

“HMRC’s most recent estimates show a continued fall in the number of company car drivers. More than half of company car drivers say that their vehicle is an essential tool of the job – not having one isn’t an option.

“Large numbers of people that used to get a company car as a perk or employee benefit are now opting out because of the rising tax cost. They are taking cash instead and the evidence suggests that they are spending this on older and more polluting vehicles.

“It is vitally important that the Chancellor seizes this tremendous opportunity to support the future of the company car by using this month’s Budget to rein in these unhelpful tax hikes.”

In the BVRLA’s written submission to the Chancellor, the organisation calls on the Government to:

1: Freeze Company Car Tax at 2018/19 rates

2: Eliminate unintentional tax increases arising from the transition to WLTP

3: Bring forward the 2% Company Car Tax threshold for Zero Emission Vehicles

to 2019/2020

4: Publish 4 to 5 year view of future Company Car Tax Bands