Electric cars become company car tax exempt
The Chancellor Alistair Darling has announced that electric cars will be exempt from company car tax for five years while electric vans have a 100 per cent write-down allowance for the first year.
The measures announced as part of the Chancellor’s Pre-Budget Report this afternoon are designed to encourage the uptake of electric vehicles within company fleets-a key step towards the wider adoption of electric cars.
Other measures likely to affect businesses and company fleets include that all employer, employee and self-employed rates of national insurance are set to rise by a further 0.5 per cent from April 2011.
The chancellor also confirmed that VAT will return back to 17.5 per cent, but there was no mention of a further increase that some broadsheets rumoured might be planned for 2011.
A fuel duty increase is still planned for April, while no mention was made about a possible extension to the Scrappage Scheme, instead a scrappage scheme for boilers will help homeowners update their heating systems and reduce carbon emissions. Changes for VED rates in April are too, still set to go ahead, when a new car first year road tax will be introduced.
The Enterprise Finance Guarantee Scheme (Small Business Scheme) to support up to £1.3bn of banks lending to smaller SME’s was due to close in March 2010. This has now been extended for another 6 months.
The Chancellor has also extended the temporary increase in the threshold for empty property relief (EPR) for a further year. For 2010/11, the threshold at which an empty property becomes liable for business rates will be £18,000.
In order to strengthen the incentives to invest in innovative industries and ensure the UK remains an attractive location for innovation, Government announces it will introduce a Patent Box, applying a reduced rate of Corporation Tax to income from patents from April 2013.
The Time to Pay scheme has helped over 160,000 businesses so far spread their tax payments over a timetable they can afford, this scheme will be extended for as ‘long as is needed’ Darling said.
An extensive range of public sector cuts has some worried. On the announcement of the Budget, Director of the RAC Foundation Professor Stephen Glaister said: “While the commitment to continue the M1 upgrade is good news, the medium term outlook for road building and maintenance programs is bleak. Motorists should get used to potholes, as there is little chance of them being filled as the spending squeeze continues to bite and highways spending slips even further down the priority list.”
Paul Ashton, managing director, Equalease, said: “The Pre Budget statement contains some interesting news for fleets, especially in terms of incentives to operate electric vehicles, but what it cannot predict is how quickly confidence will grow in industry as a whole and therefore the fleet sector. Entering 2010 will very much be a case of waiting and seeing whether we see the first few green shoots that we have emerged in recent months begin to bud or whether we will continue to be bogged down in economic mire. Confidence will have a much greater impact on the fleet sector in the next year than any measure that any Government could reasonably take.”
The Road Haulage Association (RHA) however expressed strong disappointment that the Chancellor has chosen to go ahead with another above-inflation increase in diesel duty. The rise next April will be the fourth since last December – in which time duty has risen by 16 per cent in as many months.
“This has been a stunning series of increases in the depth of a recession”, said RHA Chief Executive Geoff Dunning. “Duty amounts to a 25 per cent tax on the operation of this essential service and will drive up transport costs for UK industry and retailers, reducing UK competitiveness and increasing prices for the general public.
“Transport companies will have no alternative but to pass on the further duty increase to their customers – and we would urge the industry’s customers to recognise the need to pay sustainable haulage rates”.
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