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”.
