Popularity of electric cars drives chancellor to make U turn

20 March 2013

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Graham Farquhar, Employment tax partner at EY, commented:

“The increase in the number of ultra low emission vehicles, and the likelihood that they will only become more popular in the future, has driven the Chancellor to make changes to review the relatively low tax benefits.  

“This may come as a surprise to those who currently have a zero CO2 emissions car and enjoy a nil benefit in kind. From April 2015 these will now have a 5% taxable benefit.  Therefore a higher rate tax payer who has a Nissan Leaf or Mitsubishi i-MiEV for example, will have an increased tax cost of approximately £580.

“With the popularity of the ultra low emission cars on the rise, perhaps we are seeing the swing away from tax incentivising ultra low emission cars to ensuring they pay a fair amount of tax!”