Will Bush, tax partner at Ernst Young, comments on the tax allowances for electric vehicles:
“The extension of 100% first year allowances to the purchase of new electric vans after April 2010 will help persuade commercial vehicle fleet owners to move to a lower emissions business model.
"Electric and very low emissions cars already attract 100% first year allowances.
"A related measure abolishes the charge on employees provided with the benefit of wholly electric powered cars and vans for their private use.
“This is a strong signal to business through the tax system and should make a difference.
"In particular it will reduce the cost of an important element of the low carbon transformation, which is already underway in a number of large UK businesses.
“However, while it is encouraging that the chancellor is supporting green technologies in the automotive industry, the small package of tax measures is only aimed at wholly electrical vehicles.
"Because of the number of electric vehicles in operation across the UK it is unlikely to make a significant contribution to cutting emissions.
“Automotive manufacturers are still placing bets on different future drive train technologies: high tech diesels, next-generation petrol, hybrids in various forms, or electric vehicles - the major unknown factor is what products consumers will be convinced to buy.
"The fact that the measures are targeted purely at electric vehicles raises a number of questions:
- “How will the nationwide infrastructure that might be required to support electric vehicles be rolled out?
- And who will pay for it?
- What charging structures need to be put in place?
Many of the issues involved will not be technological but instead commercial, particularly in terms of being able to put together propositions that incentivise adoption of unfamiliar technology by customers.”
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