Chancellor Alistair Darling is set to announce a series of measures to incentivise car drivers to buy electric cars.
In his Pre-Budget Report set to be announced tomorrow, Mr Darling is set to reduce taxation on electric cars as company vehicles to encourage the firms to purchase them. For employees, electric cars are currently taxed at 9 per cent of the cost price of the vehicle, compared to up to 35 per cent for fossil fuel cars. But according to The Independent, from 2012, the tax rate for electric cars will be 5 per cent, saving a basic-rate taxpayer £750 a year.
The national newspaper has learned that the National insurance contributions on company cars paid by employers will be reduced on electric vehicles, saving £480 per car a year. While the paper also speculates that firms will get a cash-flow boost if they switch to electric vans.
Much of the Pre-Budget Report is expected to be focussed around cost-cutting measures as the country struggles through recession.
Despite a difficult year for the motor industry, the Chancellor is also expected to confirm that VAT will return to 17.5 per cent, increasing the cost of goods including cars. Additionally, the new car road tax rates set to be introduced in April are also expected to get the final go-ahead, despite calls from the Society of Motor Manufacturers and Traders (SMMT) to postpone the increases in order to support the recovery of car sales.
To encourage greener living, the Chancellor is also expected to announce the removal of taxation of income made through selling of electricity to the national grid, encouraging small scale electricity production through wind or solar energy. According to The Independent’s csources close to Mr Darling, he will also announce funds for four carbon capture and storage projects and £1bn additional investment in offshore wind.
