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Changes to Company Car Benefits from 6th April 2020
I’ve heard that the rates for company car benefits are changing, what will the new rates be?
The UK has adopted the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) to establish the carbon dioxide (CO2) emissions figures for all new cars registered from 6th April 2020. These are likely to be higher for most petrol/diesel vehicles because they reflect ‘real world’ driving conditions. This will therefore increase the benefit charge.
Cars registered after 6th April 2020
As a result, the Government will introduce a new set of benefit rates for new cars registered from 6th April 2020. The benefit rates will be based on the normal rules, but reduced by 2% for 2020/21, 1% in 2021/22 and 0% in 2022/23. This will ensure that the transition to using the WLTP is a gradual one.
Cars registered before 6th April 2020
The car benefit rates for vehicles registered before 6th April 2020 will remain the same with the introduction of range in electric mode for ultra-low emission cars. The greater the miles the car can do in pure electric mode, the lower the percentage and therefore, the lower the tax charge. For zero emissions vehicles, the benefit in kind percentage (16% for 2019/20) will be reduced to 2% for 2020/21, 1% for 2021/22 and 2% for 2022/23.
Information supplied by Cheryl Hopkins, Chartered Certified Accountant, TaxAssist Accountants. Advice shared in this article is intended to inform rather than advise. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action, as a result of reading this item, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.