Benefit in Kind and Electric Cars

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10 February 2020

Proposed changes for Ultra Low Emission Vehicles and Benefit in Kind

Are you thinking about getting electric company cars?

It is proposed that from 6 April 2020 the car and car fuel benefit calculation is changing with the introduction of 11 new bands for ultra low emission vehicles (ULEVs) including a separate zero emissions band when it comes to benefit in kind. This is to support the government’s commitment to improving air quality in towns and cities. If your company car has a CO2 emission figure of 1-50g/km, they will now need to provide the cars zero emission mileage. This is the distance that the car can travel in miles on a single electric charge. To find out more about the world harmonised light vehicle test click here. The proposed changes to company car tax introduce 15 new bandings, of which 11 will be for ULEVs. From 2020, the appropriate percentages for zero emission cars will drop from 16% to 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel.

Proposed Company Car Tax BIK Rates April 2019 – March 2020

Table shows proposed Benefit in Kind rates for models registered before 6th April 2020, based on official NEDC CO2 figures

Vehicle	Electric	FY 2019-20		FY 2020-21		FY 2021-22
CO2	range	%BIK Rate		%BIK Rate		%BIK Rate
(g/km)	(miles)	Petrol,	Non-	Petrol,	Non-	Petrol,	Non-
		Electric,	RDE2	Electric,	RDE2	Electric,	RDE2
		RDE2	Diesel**	RDE2	Diesel**	RDE2	Diesel**
		Diesel**		Diesel**		Diesel**
0		16		0		1
1-50	130+	16		2		2
1-50	70-129	16		5		5
1-50	40-69	16		8		8
1-50	30-39	16		12		12
1-50	<30	16		14		14
51-54		19		15		15
55-59		19		16		16
60-64		19		17		17
65-69		19		18		18
70-74		19		19		19
75		19		20		20
76-79		22	26	20	24	20	24
80-84		22	26	21	25	21	25
85-89		22	26	22	26	22	26
90-94		22	26	23	27	23	27
95-99		23	27	24	28	24	28
100-104		24	28	25	29	25	29
105-109		25	29	26	30	26	30
110-114		26	30	27	31	27	31
115-119		27	31	28	32	28	32
120-124		28	32	29	33	29	33
125-129		29	33	30	34	30	34
130-134		30	34	31	35	31	35
135-139		31	35	32	36	32	36
140-144		32	36	33	37	33	37
145-149		33	37	34	37	34	37
150-154		34	37	35	37	35	37
155-159		35	37	36	37	36	37
160-164		36	37	37	37	37	37
165+		37	37	37	37	37	37

** Rate applies to diesel vehicles not meeting the RDE2 standard. For diesel-hybrids, the Non-RDE2 4% diesel surcharge does not apply. All BIK rates apply to cars registered since 1998. Source: HMRC 2019. Its also worth noting that a 100% first-year allowance is available in respect of cars that meet the definition of a `low emission car’ for capital allowances purposes. To qualify, the expenditure must be incurred before 31 March 2021 – the deadline was recently extended by three years. To be a qualifying low emission car, the car must satisfy certain conditions.

The government also have a grant scheme available for the supply and installation of charging points by approved suppliers - read more here. So if you are looking to purchase or replace your company vehicles it might be time to consider your options with regard to electric opportunities.

Haines Watts

If you have company cars for staff or directors then its worth looking at the tax saving opportunities with regard to electric and hybrid cars. Contact us to find out more about the proposed changes to Benefit in Kind and company cars and how you can take advantage of this tax saving opportunity. Give us a call on 01379 640555 or email us at eastanglia@hwca.com