The Open UniversitySkip to content
 

A review of ten years of CO2-based company car taxation: impact and potential

Potter, Stephen and Atchulo, Abukari (2013). A review of ten years of CO2-based company car taxation: impact and potential. In: Universities Transport Studies Group Annual Conference, 3-5 January 2013, Oxford.

Full text available as:
[img]
Preview
PDF (Accepted Manuscript) - Requires a PDF viewer such as GSview, Xpdf or Adobe Acrobat Reader
Download (88Kb) | Preview
Google Scholar: Look up in Google Scholar

Abstract

Company cars represent the majority of UK new car sales and thus have a dominant effect on the fuel use characteristics of the entire car stock. In April 2002 a major reform of the company car taxation system was introduced with the car’s CO2 emissions being a key part of determining the cash equivalent of the benefit on which tax is due.

HMRC studies have indicated that this tax reform has produced a substantial and ongoing improvement in company car fuel efficiency. This was largely through the tax system favouring diesel cars and led to the substantial rise in diesel cars sold in the UK. However, as the transport policy agenda has moved towards the promotion of hybrid and low carbon vehicles, it is notable that these have had little uptake in the company car sector, despite adjustments in the tax structure providing them with substantial incentives.

This paper presents an analysis of the way in which this tax structure makes it difficult for low carbon cars to compete against diesel vehicles. Battery electric cars also suffer the disadvantage of not being well suited to the high mileages characteristic of company cars.

However the tax structure looks set to particularly favour new generation hybrids and plug-in hybrids. Indeed, the company car tax structure could well tip the balance to making plug-in hybrids the dominant clean vehicle technology. However, the 2012 change to the tax bands failed to take into account the effect on the uptake of low carbon vehicles and could undermine an already fragile uptake of new low carbon technology vehicles.

Item Type: Conference Item
Copyright Holders: 2013 The Authors
Keywords: company car taxation; low carbon vehicles; transport policy; sustainability
Academic Unit/Department: Mathematics, Computing and Technology > Engineering & Innovation
Open University Business School
Interdisciplinary Research Centre: Innovation, Knowledge & Development research centre (IKD)
Related URLs:
Item ID: 35517
Depositing User: Stephen Potter
Date Deposited: 21 Nov 2012 16:27
Last Modified: 04 Dec 2013 03:13
URI: http://oro.open.ac.uk/id/eprint/35517
Share this page:

Actions (login may be required)

View Item
Report issue / request change

Policies | Disclaimer

© The Open University   + 44 (0)870 333 4340   general-enquiries@open.ac.uk