Companies that invest in conventional petrol-driven cars will see a slight increase in taxes after the pre-Budget Report.
In order to qualify for the 10 per cent tax band, company cars, as from April 2012, will need to emit 99g of CO2 per km as opposed to 120g.
To meet the new requirements, car manufacturers will need to implement environment-friendly measures such as mechanisms that shut down the engine when the vehicle is motionless and stable.
The move towards green vehicle fleets was given further impetus with the pre-Budget Report announcement that, as from 2010, electric cars will be exempt from company car tax for five years and that a 100 per cent first year capital allowance will be introduced for electric vans.
This effectively means that purchasing such vehicles is to be treated for tax purposes as an investment in a business.
The hope of the government is that the measures will encourage more businesses to buy electric cars in an effort to limit the UK’s carbon emissions.
