FANCY yourself in a BMW i8, Tesla Model S, or perhaps something a little less exotic; a Nissan Leaf or a plug-in hybrid electric vehicle (PHEV) like Toyota Prius? Then there really is good news on company car tax rates around the corner.
You’re looking at a plummeting company car tax bill!
But before you put the bunting out and spend all your benefit-in-kind tax savings, there is a BUT.
(What did you expect!)
The changes don’t arrive until tax year 2020/21.
Although this may seem like it’s donkey’s years away, remember that car lease contracts run for three years, so you may be just in time, with some room for thinking before your contract runs out!
The changes will see 15 new bandings introduced, of which 11 will be for ULEVS.
The small print of the Autumn Statement documents appears to indicate that benefit-in-kind tax rates on ultra-low emission cars will be slashed when compared to those for 2019/20.
The Autumn Statement reveals that from 2020, the appropriate percentages for zero emission cars will drop from 16% to 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel.
The measure also increases appropriate percentages by 1 percentage point to a maximum value of 37% for cars with CO2 emissions of 90g/km and above.
A reduction of 14 percentage points in the tax rate for such cars.
However, that raises questions as to what the tax rate will be for cars in the 51-89g/km CO2 bracket. It also requires a realignment of existing and long-established emission thresholds, which from 76-94 g/km rise in 5g/km intervals from 95g/km.
BVRLA chief executive Gerry Keaney welcomed the news, with some caution. He said: “We are pleased that the government has recognised the importance of the company car market in supporting the take up of ultra-low emission vehicles.
“These new bandings will create a much greater incentive for employers and employees to choose the cleanest electric and hybrid cars.
“However, these decisions are pragmatic, cost-conscious ones and we are concerned that they may be deferred until the incentives come into effect.
“The ULEV market could suffer in the meantime as company car tax costs rise significantly between now and 2019.
According to Rupert Pontin, head of valuations at Glass’s, weaknesses in the general economy points to uncertainty for private or business motorists, which could perversely benefit the growth of EVs.
He said: “Primarily, there is an underlying push towards ULEV technology that can be seen in the changes to salary sacrifice rules, the new company car tax rates for 2020-21 and even in the capital allowance for EV chargers.
“It seems pretty clear that the Government envisages us driving around around in largish numbers of electric and advanced hybrid vehicles within five years which, in our view, is a good match for the rate of development of EV technology.”