The Automotive industry rejoices at a new EV tax break granted to commercial fleet buyers in the UK.

The UK Chancellor of the Exchequer, Alistair Darling, announced Britain’s decision to extend the tax break private EV consumers currently enjoy to commercial and fleet buyers. The decision was announced in this year’s pre-Budget report. The decision stated that EVs, including electric vans, would be free from company car tax for the next five years. To increase the incentive for companies to purchase plug-in vans, businesses would be able to write off their full cost against their corporation tax in the first year.

The move comes on the back of a decision made earlier in 2009 whereby the government extended tax breaks to private electric vehicle owners ranging from £2,000 to £5,000 beginning in 2011. Industry analysts and manufacturers, however, say this new move requires considerable government subsidies in the first few years to reduce the high costs that EVs initially present.

Jeremy Townsend, a spokesman for Renault, stated in the Financial Times, that the company was ‘delighted’ over the announcement as it would go a long way “towards assisting the infrastructure we need to make electric vehicles a viable solution in the UK”.

Strong commitment to EV

The announcement further highlights the strong commitment that the current Labour government shows towards promoting EVs and substantially extending the current EV infrastructure in the UK. Earlier this year the labour government dedicated serious funding towards expanding the current infrastructure making it much more accessible within the next two years.

The pre-budget report reiterates the Labour government’s attempt to make Britain the premier EV market in Europe. As the tax incentive and the additional announcement of an £30 million dedicated to the development towards low carbon vehicle competition can encourage larger manufacturers, such as Nissan or Ford, to relocate their European EV production facilities to the UK.

The UK has been courting Nissan to place its European production centre for its LEAF EV at Nissan’s Sunderland plant for some time now with previous incentives such as that declaring the Sunderland region as the UK’s first low carbon Economic area focused on ultra low carbon vehicles.