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Home » News & Insights » Company Car Tax – Changes to Benefit in Kind Tax Banding

Company Car Tax – Changes to Benefit in Kind Tax Banding

Posted on 29th January 2019

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 (ULEV), 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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Filed Under: Exclusive News Tagged With: Benefit In Kind, Company Car, ULEV

Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

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