An influential ‘think tank’ is proposing replacing vehicle excise duty (VED) with a one-off charge on new cars based on CO2 emissions, which would be included in benefit-in-kind (BIK) calculations for company cars.

CentreForum says the Government would set an annual emissions "pivot point" equal to the emissions of the best performing 1% of cars the previous year. Cars with emissions below the 1% level would receive a subsidy. Cars above this level would attract an emissions charge at the time of purchase.

For example, if the pivot point was 94g/km of CO2, cars with emissions above 94g/km would pay a first registration charge of between £35 to £50 per gram above 94g and cars with CO2 emissions lower than 94g would therefore receive a subsidy of £50 per gram below that level.

CentreForum says that this one-off charge would then be included in what is the current P11D price to calculate BIK liability.

Read next week’s Fleet News for a full report, including comment and analysis, on the CentreForum scheme.