UK contemplating tax cut electric company cars

Britain is considering cutting the tax on company-owned electric cars to zero percent, a source familiar with the matter told Reuters on Monday, in a bid to stimulate the market for greener vehicles.

Finance minister Alistair Darling could announce the measures in his pre-budget report on Wednesday as the government is keen to boost its environmental credentials and provide positive stimulus to car manufacturers.

Businesses currently pay National Insurance contributions and employees pay income tax, based on the cost of company cars and its CO2 emissions. The range varies from 9 percent for electric cars to 10-35 percent for fossil fuel cars.

“The government is thinking about reducing the rate for electric cars from 9 percent to 0 from 2012,” the source said.

The source said that at the moment there were only about 50 electric company cars out of a fleet of roughly 1.1 million and the hope is such an incentive will encourage businesses to buy more electric cars as companies like Nissan and Renault boost production next year.

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