Company car tax rates for 2020-21 revealed

Plans for the company car tax bands have been published by HMRC for the tax year 2020 to 2021, with a focus on promoting the use of ultra low emission vehicles (ULEVs). The plans have been announced in draft legislation that is now open for consultation, with rates to be confirmed in the Budget 2017.

The new system would see a number of new tax bands introduced to differentiate between ULEVs according the electric-only range, while a number of redundant high emission bands have been cleaned up into one rating.

Whereas currently there is one BIK band for vehicles with CO2 emissions of 0-50 g/km, come 2020. there would then be six. Electric vehicles with zero tailpipe emissions are likely to have a have a BIK rate of 2%, while models with 1-50 g/km CO2 - such as PHEVs - would vary from 2%-14%.

The reason is that HMRC is aiming to offer greater benefits to those that choose vehicles with longer electric ranges, and are therefore more likely to be in zero-emission mode more often.

Electric cars emitting 1-50 g/km CO2 and able to travel 130 miles or more would also have a BIK rate of 2%, while models that cover less than 30 miles on electric power would have a BIK rate of 14%.

Reflecting the increase of lower emission cars, new CO2 bands are proposed, with each subsequent band seeing smaller increments. Currently, three bands cover vehicles with emissions from 51-99 g/km CO2; in the plans there would be 10.

To make sure there isn’t a huge number of bands though, models that emit 160 g/km CO2 or more all have the same maximum BIK rate of 37%, which tidies up a number of bands that will all have the same rating in the next few years.

There is no mention of a diesel surcharge in the draft legislation, looking as though the extra 3% charged for diesel models over petrol (up until the limit of 37%) will be scrapped (again).

The table below shows CO2 bands and BIK rates from the HMRC Finance Bill 2017 draft legislation document.

CO2 (g/km) Electric range (miles) BIK 2020 to 2021
0 2%
1-50 >130 2%
1-50 70 - 129 5%
1-50 40 - 69 8%
1-50 30-39 12%
1-50 <30 14%
51 - 54 15%
55 - 59 16%
60 - 64 17%
65 - 69 18%
70 - 74 19%
75 - 79 20%
80 - 84 21%
85 - 89 22%
90 - 94 23%
95 - 99 24%
100 - 104 25%
105 - 109 26%
110 - 114 27%
115 - 119 28%
120 - 124 29%
125 - 129 30%
130 - 134 31%
135 - 139 32%
140 - 144 33%
145 - 149 34%
150 - 154 35%
155 - 159 36%
160 and above 37%

Table courtesy of HMRC. Electric range in miles is the number of kilometres declared on the certificate of conformity or type approval, multiplied by 0.62.

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Chris Lilly

Author:Chris Lilly
Date Updated:6th Dec 2016

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