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Company car tax and VED changes called for to encourage further ULEV demand

Company car tax and VED changes called for to encourage further ULEV demand

Stronger fiscal incentives, including changes to company car benefit-in-kind tax and Vehicle Excise Duty, must be implemented by government to further encourage demand for lower emitting and ultra-low emission vehicles.

The Committee on Climate Change in its latest report, ‘Reducing UK emissions - 2018 Progress Report to Parliament’, said current purchasing trends were undermining new car and van emissions targets and must be reversed.

Furthermore, the Committee also called on the government to reconsider its freezing of fuel duty.

Average new car carbon dioxide emissions increased last year for the first time since records began in 2000 and, said the Committee, the shift towards the purchase of higher-emitting vehicles, notably SUVs, was working against the regulations for new cars.

The report said: “The move towards higher-emitting cars presents a major risk to future carbon budgets and it is important that incentives to purchase lower emitting vehicles are strengthened to support new car regulations. The shift might be halted or reversed through revenue-neutral incentives [including] greater differentiation of Vehicle Excise Duty and changes in company car tax.

“Policies, including fiscal instruments, must strengthen incentives to purchase cleaner vehicles and support new car and van emissions targets. The current move to higher emitting cars is undermining efforts to improve fleet efficiency and must be addressed.”