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Electric cars to be exempt from company car tax

The Treasury has axed all benefit-in-kind tax on battery-powered cars from next year

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Businesses looking to add electric cars to their fleets are set for a boost next year — with zero-emission vehicles set to be exempt from company car tax in 2020.

Following a review of the changes to the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) regulations, the Treasury has abandoned benefit-in-kind charges (BiK) on electric cars next year.

As a result, cars emitting less than 50g/km of CO2 and capable of at least 130 miles of electric range will be covered by a 0% BiK rate from April 6 next year. This theoretically stretches to hybrids and plug-in hybrids as well, although no models fitting these criteria are currently available in the UK.

Charges will apply from the 2021/22 financial year though, with a 1% BiK rate on these vehicles, which will increase to 2% in 2022/23. A 2% rate had originally been planned to be applied in 2020/21.

   

A statement from the Treasury said it “recognises the value of the company car market in supporting the transition to zero-emissions technology” and also considers that by encouraging more company car drivers into low-emission cars, it can help generate “a competitive second-hand market in these vehicles”.

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Stuart Masson
Stuart Massonhttps://www.thecarexpert.co.uk/
Stuart is the Editorial Director of our suite of sites: The Car Expert, The Van Expert and The Truck Expert. Originally from Australia, Stuart has had a passion for cars and the automotive industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.

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Latest articles

Citroën C3

The Citroën C3 is a small supermini-class five-door hatchback. The current model was launched in the summer of 2016 before going on...

Pricing and specs for Fiat 500X Sport

The new Fiat 500X Sport will start from £22,500 and introduce a touch of sportiness at the top of the compact crossover’s range.

Subaru XV e-Boxer test drive

While the Subaru XV e-Boxer is far from class-leading – the CVT gearbox being the main issue – it offers an interesting and unique alternative to the norm.

Hyundai 45 concept previews the brand’s future

Hyundai has revealed its future design direction at this year’s Frankfurt motor show with this — the Hyundai 45.

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