Fully electric fleet vehicles will not incur company car tax in 2020-21

The UKgovernment has canned previous rates for benefit-in-kind (BIK) taxes for fullyelectric vehicles, creating two new BIK rates for those driving company carsregistered after 6th April 2020 and those registered prior to 6thApril 2020.

HM Treasuryhas recently confirmed that any new company car registered from 6thApril 2020 will see most BIK tax rates cut by 2%.

Subsequently,brand-new fully electric company cars with no tailpipe emissions whatsoeverwill then be taxed at 0%.

This ratewill also be applicable to fleet vehicles registered from 6th April2020 with tailpipe emissions between 1-50g/km and fully electric ranges of 130miles or greater.

The zeropercentage BIK tax rate will also extend to fully electric fleet vehiclesregistered before 6th April 2020.

The BIK taxrate will then increase for fully electric fleet vehicles registered from 6thApril 2020 to 1% in 2021-22, followed by a rise to 2% in 2022-23. Fully electricfleet vehicles registered prior to 6th April 2020 will also see BIKtax rates rise in the same way.

However,fleet vehicles registered prior to 6th April 2020 with tailpipeemissions between 1-50g/km and fully electric ranges of 130 miles or greaterwill see a rise to 2% BIK tax in 2020-21 which will then remain the same forthe next two tax years.

From the2023-24 tax year, fleet vehicles will operate under a unified BIK tax tableonce again once the tax rates have been realigned.

Thegovernment believes that by “providing clarity” regarding BIK tax rates,“businesses will have the ability to make more informed decisions about howthey make the transition to zero emission fleets”.

It addedthat “appropriate percentages beyond 2022-23 remain under review and will beannounced at future fiscal events”. Going forward, the government plans toconfirm “appropriate percentages at least two years ahead of implementation toprovide certainty for employers, employees and fleet operators”.

Jay Parmar,director of policy and membership at the British Vehicle Rental and LeasingAssociation (BVRLA), welcomed the government’s decision to use the company carmarket to support “the transition to zero emission technology”.

“TheTreasury is giving back some of the unfair company car tax windfall it was setto receive as a result of WLTP and providing some essential extra visibility onfuture tax costs for those looking to order their next vehicle,” added Parmar.

“This is agood day for company car drivers and our members.”