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Haines Watts Great Yarmouth Phone icon 01493 800 800

Benefit in Kind and Electric Cars

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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

 

 

 

Want to know more? Call us on 01493 800 800 or email greatyarmouth@hwca.com

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