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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.