Policy: Company Car Taxes

There are potential synergies to be captured by targeting both the private and company car fleet. In April 2002 the UK’s company car benefit-in-kind tax was changed to reflect CO₂ emissions performance of cars (Mazzi and Dowlatabadi, 2007). In the UK, the reform of company car tax has led to the purchase of more efficient company cars. While it is difficult to attribute specific impacts to the VED CO₂ tax, estimates of the impact of the company car CO₂ tax on company car diesel growth range from 33% to 100%. Although other factors such as the European manufacturer voluntary CO₂ program, oil prices, and technological change may also be influencing factors (Mazzi and Dowlatabadi, 2007). Nevertheless in the absence of a similar incentive in the private car market, new private cars in the UK now have higher emissions than new company cars. Because of weaker taxes in the private market, in some cases people have opted out of the company car scheme (Anable and Bristow, 2007; King, 2007).