At any other time, this would seem very surprising, but in recent months, people have had other things to worry about. To help fleet managers, and anyone else interested in company cars, get up to speed, here are the highlights of the most recent changes.
1. 0% company car tax (or benefit-in-kind tax) for electric vehicles
Cars with zero emissions registered in this tax year won’t be paying company car tax. Some low emission vehicles won’t either. And the rates stay low for the next few years too, at 1% for 2021-22 and then 2% until at least 2024-25.
2. Other WLTP changes to company car tax for new vehicles
With the WLTP test likely to produce higher results for many vehicles, the Chancellor has cut company car tax rates by two percentage points in 2020-21 and by one percentage point between 2021 and 2023. One consequence of this change is the 0% rate for electric vehicles, which we have mentioned above, as we felt it was significant enough to highlight on its own.
This was a long-expected change, but the Chancellor also announced the tax rates for the two years from 2023 to 2025 – and kept them at the same level as those for 2022-23. It’s good news for fleets as there’s now much more clarity for long-term planning, but it’s also worth noting that higher emission vehicles are likely to pay a significant sum.
The charge for the heaviest emitters (those above 170 grams of CO2 per km) is 37% and even low emitting petrol and diesel cars are likely to be paying over 20%.
3. Plus new rules for vehicles registered before 6 April 2020
Cars registered in previous years won’t see their tax rates reduced this year, but the levels are frozen between 2021 and 2023 – and the more lenient NEDC figures will be used for the calculations as well.
4. Extra savings for electric vehicles
Cars with zero CO2 emissions have a £0 first-year road tax rate from 1 April 2020 (as do ultra-low-emitting vehicles using alternative fuels) – and electric vehicles costing over £40,000 are now exempt from the £325 road tax supplement that applies in every year after the first one. It could quickly add up to a big saving.
5. The Plug-In Car Grant (PiCG) isn’t dead just yet
Speculation suggested the Plug-In Car Grant would be allowed to fade away when its funding ran out in April. However, the Government is clearly throwing its weight behind electric vehicles and extra funding has been found to keep the grant going – though it has been reduced from £3,500 to £3,000 – and it now only applies to vehicles that cost less than £50,000.
Watch our upcoming webinar
Want to know more about these changes and the opportunities they offer your fleet? Join us at our free webinar on Thursday 9th July at 11am (GMT), with LeasePlan’s Head of Consultancy, Matthew Walters and Specialist Fleet Consultant, Caroline Sandall, where they will explore this topic in detail. Register now.