Under the changes, BiK rates will be increased by a further two percentage points on company cars emitting more than 75 g/km in 2017/18 and 2018/19, further encouraging fleets to seek out ultra-low emission models.

As a result of the changes, the differentials between the lowest-emitting vehicle bands will narrow although one year later than previously announced. In 2017-18 there will be a 4 percentage point differential between the 0-50 and 51-75 gCO2/km bands and between the 51-75 and 76-94 gCO2/km bands. In 2018-19 this differential will reduce to 3 percentage points. The differential will reduce further to 2 percentage points in 2019-20 in line with the Budget 2013 announcement.

The rates mean that low-emission cars, such as EVs, with emissions up to 50g/km, such as an electric car, will see a series of stepped increases, from paying 0% benefit-in-kind tax in 2013/14 and 2014/15 to 5% in 2015/16, 7% in 2016/17, 9% in 2017/18 and 13% in 2018/19.

In response, the BVRLA has said that the Chancellor has missed a major opportunity to support ultra-low emission vehicles.

BVRLA chief executive Gerry Keaney said: ‘The Chancellor talked about extending support for low emission vehicles, but there is precious little evidence for that in this Budget.

‘The electric vehicle market is still in the doldrums, and the current incentive regime isn’t working. The new company car tax rates announced today will do nothing to encourage fleets and their drivers to take a risk on this costly and uncertain technology.

‘A business driver thinking about choosing an expensive zero-emission vehicle this year will see their company car tax rate rise from nothing to 13% within four years. Their cost of motoring will rise much faster than someone choosing a gas-guzzler.

‘Any cost benefit this industry might have received from the abolition of the 3% diesel supplement in 2016 has been dragged back and by 2018/19 company car drivers will be contributing an extra £480m in annual tax revenues.’