No company tax on electric cars

Chancellor Alistair Darling is encouraging firms to buy electric cars by announcing that the vehicles will be exempt from company car tax for five years from April 2010.

He has also insisted that the economic crisis would not affect large transport projects such as the £16 billion cross-London Crossrail scheme.

The Chancellor confirmed that the fuel duty rise of 1% above inflation would go ahead in April as planned, but kept quiet about any immediate increase in petrol prices.

Professor Stephen Glaister, RAC Foundation director, welcomed the incentive for firms to build electric car fleets.

He added that the price of petrol would increase by 2.5p following the return of VAT to 17.5% on January 1.

RAC motoring strategist Adrian Tink said he hoped firms were encouraged by the Chancellor's announcement.

"However, given the current state of the economy, purchasing new vehicles may not be at the forefront of many companies' minds and hence this move may not have an immediate effect. Also the distance the cars can travel and the lack of charging infrastructure would be a huge factor for those that do high mileage."

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