Starting from tax year 2020/21, changes will be made to company car tax benefit-in-kind bands. These were first put forward in 2016 and finally confirmed in autumn 2017. The changes affect ultra-low emission vehicles, which are cars with CO2 emissions below 75g/km.
What does this mean in practice?
Until 2020 the benefit-in-kind rate for company car tax does increase for sub-75g/km ULEVs with even zero-emission cars rising to 16% tax banding in 2019/20.
However, in 2020 all electric vehicles will drop to a 2% rate under the new company car tax incentives.
In 2020/21 when the new ULEV rates kick in, the most tax efficient cars will be those with CO2 emissions below 50g/km. In addition, there are further incentives for those cars that can travel furthest on electric only.
That is when their electric motoring range will band 1-50g/km hybrids with less than 30 miles attracting a 14% rating; while those, which can achieve 70-129 miles electric-only, will attract a 5% rating.
ULEVs with CO2 emissions between 50g-74g/km CO2 are on a graduated scale from 15% to 19%.
Diesel-only vehicles will to attract a further 4% surcharge from the 2018/19 tax year onwards while diesel hybrids are exempt.
The company car tax changes might appear complicated, but the only certain way to contain benefit in kind exposure is by choosing a ULEV vehicle.
New company car tax bands and rates tax year 2020-21
| CO2 bands (g/km) – 2020 / 2021 tax year | Electric range (miles) | Percentage of list price to be taxed – PETROL (diesel +4%) |
| 0 – 0 g/km | 2 | |
| 1 – 50 g/km | >130 | 2 |
| 1 – 50 g/km | 70 – 129 | 5 |
| 1 – 50 g/km | 40 – 69 | 8 |
| 1 – 50 g/km | 30 – 39 | 12 |
| 1 – 50 g/km | <30 | 14 |
| 51 – 54 g/km | 15 | |
| 55 – 59 g/km | 16 | |
| 60 – 64 g/km | 17 | |
| 65 – 69 g/km | 18 | |
| 70 -74 g/km | 19 | |
| 75 – 79 g/km | 20 | |
| 80 – 84 g/km | 21 | |
| 85 – 89 g/km | 22 | |
| 90 – 94 g/km | 23 | |
| 95 – 99 g/km | 24 | |
| 100 – 104 g/km | 25 | |
| 105 – 109 g/km | 26 | |
| 110 – 114 g/km | 27 | |
| 115 – 119 g/km | 28 | |
| 120 – 124 g/km | 29 | |
| 125 – 129 g/km | 30 | |
| 130 – 134 g/km | 31 | |
| 135 -139 g/km | 32 | |
| 140 – 144 g/km | 33 | |
| 145 – 149 g/km | 34 | |
| 150 – 154 g/km | 35 | |
| 155 – 159 g/km | 36 | |
| 160 and above g/km | 37 (max) |
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