A cross-party group of MPs has piled pressure onto the government to use next week’s budget to implement greater tax incentives for electric vehicles just days after lobbyists for the automotive and green sectors did the same.
The group of over 40 MPs wrote to the chancellor Philip Hammond earlier this week calling for the 2% rate for benefit in kind company car tax, currently slated for 2020, to be brought forward by a year.
Currently, the rate is due to increase to 16% in 2019/20 before falling to the 2% rate, a delay that MPs say is discouraging those considering purchasing an EV and therefore slowing the rate of take-up.
In the letter from the office of Neil Parish, chair of the Environment, Food and Rural Affairs Select Committee, the MPs write: “Ensuring sufficient fiscal drivers are at the heart of Treasury policy is crucial if government is to realise the full potential of these agendas. The Budget provides the chance to do this – by driving positive and discouraging negative behaviours through clear fiscal incentives towards purchasing electric vehicles.”
Addressing Hammond directly, it adds: “We are calling on you to take this opportunity and work in closer partnership with industry to increase the number of electric vehicles in our constituencies by making this small change.”
The letter came just days after identical calls from the likes of the AA, the Association of Car Fleet Operators, the British Vehicle Rental and Leasing Association (BVRLA), RAC and green groups like the Renewable Energy Association and Green Alliance.
“As businesses make decisions today on what cars to introduce to their employees – a decision which will serve them for the next 3-5 years – the current climbing BIK rate (peaking at 16% next year) has proven a barrier to the uptake of electric vehicles.
“We recommend that the right tax incentives must be in place now to enable UK businesses to make cleaner and greener vehicle choices today, not tomorrow. Only by doing so, can the government achieve its ambition to lead the way on the journey to zero emissions,” the groups’ letter states.
Both letters emphasise the commitment being made by the vehicle rental and leasing industry to increase the number of plug-in vehicles from 50,000 today, to 720,000 by 2025, and echo calls from the BEIS select committee to “bring forward the introduction of preferential rates on company car tax without delay”.
BVRLA chief executive Gerry Keaney said: “Last week the BEIS Select Committee made clear in its report about driving the transition to electric vehicles that time is of the essence if government is serious about the UK leading the transition to zero emission.
“The whole automotive industry is speaking with one voice on this, and we are pleased to see that Parliamentarians from across all parties are supportive of our calls. We can now only hope that on Budget day, the chancellor will support our collective voice of reason and take the right steps to create a tax system that incentivises the uptake of zero-emission vehicles, rather than one than prevents progress.”
The latest calls follow those from the likes of Aviva, Energy UK, housebuilder Willmott Dixon and Sky who last month said the current schedule of benefit in kind taxation offers a “cliff-edge that is disincentivising zero-emission uptake before 2020/21”.