It has been confirmed by the Government that company car drivers of electric vehicles (EV cars) will no longer pay any Benefit in Kind Tax (BiK) for 2020 and 2021.
HM Treasury has abandoned its previously published BiK rates for this period, instead, creating two new BiK tables for company car drivers. One table is applicable for drivers with a car that has been registered after April 6th, 2020; the other is for vehicles registered prior to this date.
Cars that are registered from April 6th, 2020 will result in most company car drivers enjoying a two percent Tax rates reduction.
For pure EV cars (electric vehicles with zero emissions), company car drivers are not liable to pay any BiK tax at all.
In addition, the zero-percentage rate is extended to company car drivers in electric vehicles that are registered before April 6th, 2020, instead of the previously anticipated reduced rate of 2 percent for the period of 2020 and 2021.
The 0 percent rate applies to company cars registered from April 6th, 2020 with CO2 emissions from between 1-50g/km with a pure electric mile range of 130 miles plus. Both are set to increase to 1 percent in 2021 and 2022, and 2 percent in 2022 and 2023.
Pure electrified cars registered prior to April 6th, 2020 will also increase to 1 percent and 2 percent respectively over the same periods.
For company cars registered before April 6th, 2020 that have CO2 emissions of between 1-50g/km and a pure EV driving range of 130 miles, there will be a 2 percent BiK rate in 2020 and 2021 which will remain the same for the next two consecutive tax years.
From 2023 and 2024, there will be one BiK tax table and rates are to be realigned.
The 4 percent diesel charge on BiK rates remains the same, but vehicles that are in the RDE2 category will continue to be exempt.
These changes do not affect, capital allowances, lease rental restriction or any other CO2 taxes and incentives. They do, however, include fuel benefit charge.
Existing vehicle excise duty (VED) rates were also not part of this review and will stay the same from April 6th, 2020, notwithstanding the introduction of WLTP values from this date. The Government has said that that a call for evidence for VED will be published later in 2019.
To obtain your free copy of the new Benefit in Kind Tax (BiK) tables for 2020 and 2021, contact one of our dedicated Fleet Team at All Vehicle Contracts Limited, who are also on-hand to advise you about any company vehicle related matters.
Will the new zero percent BiK Tax rate for pure electric vehicles convince you to change your next company car to an EV? Let us know on Twitter @AVC_Leasing- join in the conversation!
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All Vehicle Contracts Ltd Published: Jul 11 2019