Company Car Drivers Can Pay 10 Times Less Tax In 2020

Company Car Drivers Can Pay 10 Times Less Tax In 2020

The government has finally offered Benefit in Kind (BiK) taxation clarity. Company car drivers will be able to pay up to ten times less in taxation next year. But there’s a catch…

Clarity For Company Car Drivers 

The fleet industry has been in a state of despair for years because of a lack of clarity around BiK. So much so that some businesses had begun to question the attraction of company cars as an employee benefit. This could, however, be about to change. HM Treasury has effectively binned previously published BiK rates as a result of the roll-out of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). In their place, it’s produced two BiK tables for company cars registered after April 6, 2020, and one for those registered before April 6, 2020.

What Are The New Rates? 

For cars registered after April 6th, 2020, most tax rates will be reduced by two percentage points. What this means is that drivers of pure electrics (which produce zero emissions) will pay absolutely no BiK whatsoever. This will also apply to pure electrics registered before April 6th; these drivers were already due the very welcoming rate of 2% via the older rates. The same 0% rate will also apply to company cars with emissions ranging from 1-50g/km and which have an electric range of 130 miles or more. These will gradually increase, however, to 1% in 2021/22 and 2% in 2022/23. Plug-in hybrid drivers can also look forward to more modest savings, although regular hybrid drivers won’t. For company car drivers that use petrol or diesel models, their rates will actually see small increases.

In a statement the Government 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”. It also hinted at better clarity moving forward, “the Government aims to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators.”

What It All Means

It seems as though the Government has finally listened to the frustrations felt by businesses and company car drivers; which have petitioned for greater clarity around BiK for years. What we can also infer from the changes is that the Government is practically committing to it pledges (at least in one respect) to encourage the adoption of cleaner vehicles. The new rates will be of no consolation to the majority of company car drivers, who use diesel and petrol. But they clearly will make pure-electrics and plug-in hybrids much more attractive. After all, making the transition to one can now lead to savings of 90%.

It’ll be interesting to see whether the new rates lead to greater fleet adoption of low-emission vehicles. Motorists are, after all, surprisingly stubborn in embracing change. If they resist the temptation of, potentially, enormous savings the government and campaigners will clearly have their work cut out in attracting more drivers to EVs.

Britain’s Biggest Energy Supplier’s Will Electrify Their Fleets By 2030: https://www.autoservefleet.co.uk/latest-news/energy-suppliers-electrify-fleets-2030/

The End of Range Anxiety: New EV Batteries Can Cover 600 Miles – http://autoserve.co.uk/motoring-news/new-ev-batteries/

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