Excellent News (At Last!) For Company Car Drivers
Company car drivers choosing a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21 the Governement revealed this week.
After the long-awaited review of WLTP and vehicle taxes, The HM Treasury has shelved the previously published BIK rates for 2020/21.
There are two new BIK tables for company car drivers; a table for those driving a company car registered after April 6, 2020, and one for those driving a company car registered before April 6, 2020 (see below).
How The Changes Will Be Implemented.
For cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points.
Company car drivers who have Electric vehicles with zero tailpipe emissions will be taxed at 0% – paying no BIK tax at all.
Furthermore, the zero percentage rate is also extended to company car drivers in pure electric vehicles registered prior to April 6, 2020, who were already looking forward to a much reduced rate of 2% for 2020/21.
For company cars registered from April 6, 2020, with emissions from 1-50g/km and a pure electric mile vehicle with a range of 130 miles or more – the zero percentage rate will also apply.
Will There Be Increases?
In both these cases, in 2021/22 they will increase to 1% and then 2% in 2022/23.
For pure electric company cars registered before April 6, 2020, will also increase to 1% and 2% in subsequent years, 2021/22 and 2022/23.
However, company cars registered before April 6, 2020, with emissions from 1-50g/km and a pure electric mile range of 130 miles or more attract a 2% BIK rate in 2020/21 and stay the same for the two subsequent tax years.
From 2023/24, fleets will have one BIK tax table again as the rates are realigned.
What The Government Has Said
“by providing clarity of future the appropriate percentages, businesses will have the ability to make more informed decisions about how they make the transition to zero emission fleets”.
“Appropriate percentages beyond 2022-23 remain under review and will be announced at future fiscal events.
“The Government aims to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators.”
So what does this all really mean to the company car driver?
We are being told that by 2040 you won’t be able to buy a new combustion engine car which is why there seems to have been an explosion of electric vehicles in both full totally electric or hybrid form and this will continue to grow in numbers. So the choice is getting better and the incentives from the government are increasing.
It is time to switch and as a company offering company cars as part of their package do you understand how it can help reduce cost and create a better carbon footprint.
Most companies and their drivers that we speak to don’t really understand what is the best way forward and lets be honest it is a complicated process.