Clause 44
Finance Bill
6:15 pm
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
As the hon. Lady will know, the whole approach to company car taxation since it was reformed in 2002 has been to base it on carbon emissions, which encourages the take-up and development of more fuel-efficient cars in company fleets.
The clause promotes more environmentally efficient business travel and the take-up of cleaner cars because it will reduce the lower threshold from 135g/kg to 130g/kg of emissions. The lower threshold rate relates to an appropriate percentage of 15 per cent., which will have the effect of reducing each of the 21 company car tax bands by 5g/kg. The new rules will apply from 6 April 2010.
In terms of the 120g/kg category at the very low end, about which the hon. Member for Putney asked, we anticipate that over 100 different cars in the next three years would qualify on those emissions bases. This is set within the context of the forthcoming EU regulatory requirements, which will ratchet down the emissions that are allowable under EU law. We believe that manufacturers are already responding to the challenge of populating that area of the company car tax threshold rate, and the hon. Lady should also bear in mind the fact that fleet car sales are about half of all new car sales per year. It is therefore particularly important to send these messages to manufacturers who are aiming at the fleet car market. It is a very influential market—half of all new car sales—and it presents a way of achieving quite a rapid turnover and an improvement in CO2 emissions from new cars on the road.