The Government has announced a freeze on company car tax for fleet cars and the introduction of a zero Benefit-in-Kind rate for fully electric vehicles as part of its WLTP review.
Estimates say that 1 million company car drivers will benefit from the freeze.
- Vehicles registered before 6 April 2020 getting their company car tax bands being frozen at the 2020/21 rates until 2022/23.
- People registering new cars after 6 April 2020 will see a two-percentage point tax cut while all zero-emission company will pay no tax.
- After the two-percentage point decrease in 2020/21, rates will then increase by one percentage point in 2021/22 and 2022/23.
The government has also confirmed it's aim of announcing "appropriate percentages" at least two years ahead of implementation. This will help to provide certainty for employers, employees and fleet operators.
Existing VED rates will be maintained on introduction of WLTP from April 2020 while a call for evidence will be published later this year seeking views on moving towards a more dynamic approach to VED which recognises smaller changes in CO2 emissions.
The changes do not affect the Lease Rental Restriction, Capital Allowances or any other CO2-related taxes and incentives but will include fuel benefit charge
Why it may benefit you to order your next lease car ASAP.
A revised structure of tax linked to vehicle emissions, due to be introduced for all newly registered cars from April 2020, means that until the 2022/23 tax year, there will be two BiK tax systems.
The first system will apply to all cars registered before 6 April 2020 and tested using the NEDC test cycle. For cars registered from 6 April 2020, a new structure will apply, based on the CO2emissions data for cars tested using the new WLTP test cycle.
The WLTP test cycle is more stringent and therefore most vehicles emissions will rise. In short, it is going to be financially beneficial to lease a car registered on or before the end of March 2020.
Let’s look further into this.
The Government has accepted that there will be a rise, more or less across the board, in CO2 emissions, because WLTP is more stringent, and will be offering an allowance to drivers by dropping tax rates by approximately 2%. This means that if a vehicle’s emissions have gone up by 10g/km the driver should not be disadvantaged. In reality however, most vehicles emissions will rise by more than 10g/km which means drivers will incur more charges.
The only way, therefore, to avoid charges is to arrange a new lease car that will be registered on or before the 31st March 2020. Our team are on hand to guide you through the list of vehicles that are in stock, that can be delivered before this deadline – and of course they can ensure your needs are met in other areas – make/model/specification – too.
It is worth pointing out that if you are midway through a lease the emissions cannot change and therefore the tax you pay is set.
Here are two examples of how emissions will change – one showing a reduction and one a significant rise.
|Peugeot 3008 Estate 1.2 Puretech Allure auto
|Nissan Qashqai 1.5 dCi N-Connecta