TQOTW: How Do The New Company Car Tax Bands Favour ULEVs?

How do the new company car tax bands favour ultra-low emission vehicles (ULEVs)?

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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If you have a tax query, why not contact the Tax Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at competitive rates.

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Tax Advisor
0844 892 2470


Prior to joining the team, Faz worked for PwC for 4 years as a Corporate Tax advisor. During his time there he gained a wide variety of tax experience, ranging from Corporate Tax, Personal Tax, M&A Due Diligence, Trusts, NRLs and Partnerships providing technical advice as well as compliance services to a variety of clients ranging from SMEs to large multi-nationals.

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