Two new percentage bands for company cars with low C02 emissions will be published in the Finance Bill 2013 on 28 March.
The Chancellor referred to the change in his Budget speech, saying: “We’ll support the manufacture of ultra-low emission vehicles in Britain with new tax incentives.”
Cars emitting 0-50g/km of C02 will be subject to the 5% band and cars emitting 51-75g/km at 9% from 2015-16.
For cars emitting more than 75g/km of C02, these will be increased by two percentage points to a new maximum of 37%.
The Budget tax information note setting out the measure explained that there will be a 3% differential between the 0-50g/km and 51-75g/km C02 bands and between 51-75g/km and 76-94g/km CO2 bands.
In addition, in 2018-19 and 2019-20 there will be a 2% difference between the 0-50 and 51-75 g/km CO2 bands and between the 51-75 and 76-94 g/km CO2 bands.