From 6 April 2020 calculation of company car taxable benefits will be changed to favour electric and hybrid vehicles. However, due to a switch in the methods used for measuring CO2 emissions tax advisers will have to refer to two different car benefit tables.
The calculation of company car benefits is based on the official CO2 emissions of the vehicle and a percentage of the list price. For every 5g/km of additional emissions from 94g/km the percentage is increased by one point until the maximum 37% is reached.
Cars with emissions of less than 94g/km are unfairly taxed by this system, so from 6 April 2020 the lower bands of the car benefit table will be redrawn as follows:
CO2 Hybrid miles Petrol and Diesel
Emissions on zero electric %
g/km emissions %
0 N/A 2 N/A
1-50 less than 30 14 18
1-50 30-39 12 16
1-50 40-69 8 12
1-50 70-129 5 9
1-50 130 or more 2 6
51-54 N/A 15 19
Hybrid cars with CO2 emissions of no more than 50g/km are split into five bands depending on the zero-emissions range the car is capable of. Pure electric cars are taxed at 2% of list price. For cars with CO2 emissions of over 54g/km the percentage increases by one point until the maximum 37% is reached. These percentages will remain unchanged until 6 April 2023.
A spanner has been thrown into this arrangement by a change the method the UK uses to determine CO2 emissions, from New European Driving Cycle (NEDC) measure to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), with effect from April 2020.
The CO2 emissions measured under WLTP tend to be higher than under NEDC. To compensate for this sudden jump in recorded CO2 emissions, the car benefit table will be altered again from 2020/21 but only for cars first registered on and after 6 April 2020.
This means we will have two parallel tables to calculate car benefit for 2020/21 to 2022/23. The table above must be used for cars registered before 6 April 2020. For cars registered on and after 6 April 2020 all the percentages are reduced by 2%, so new electric cars will have zero taxable benefit for 2020/21.
This “new car” table will be amended in 2021/22 so all percentages are increased by 1%, and again in 2022/23 when all percentages will be increased by another 1%. This should bring the old car and new car tables back in line, so we can revert to one table, assuming the Government doesn’t have other ideas by then.
Written by the Tax Advice Network