Boost for Ultra Low Emission company cars in Budget 2020
The Budget, delivered on Wednesday 11 March by Chancellor of the Exchequer Rishi Sunak, confirmed the new benefit-in-kind (BIK) tax rates as proposed by HM Treasury in July 2019 in the Review of WLTP and vehicle taxes. For cars with zero tailpipe emissions, most commonly battery electric vehicles (BEVs), the percentage figure from which company car tax is calculated is confirmed as 0% in the 2020/21 tax year, 1% in 2021/22 and 2% until 2024/25.
The rates for cars with emissions from 1g to 50g/km CO2 (plug-in hybrids) range from 0% to 12% in 2020-21, based on electric driving range. It was also confirmed that the percentage rates for 2022-23 will be extended for a further two years, providing certainty for both company car drivers and employers.
Continuation of government plug-in vehicle grants
At Budget, it was announced that government is providing an additional £532 million for consumer incentives for ultra-low emission vehicles. This comprises £403 million for the plug-in car grant (PICG), extending it to 2022/23. The government will also provide £129.5 million to extend the plug-in grants for eligible vans, taxis and motorcycles to 2022-23, recognising that the market for other ultra-low emission vehicles is still at an early stage of development.
There has been a small reduction to the maximum value of the plug-in car grant to £3,000, and cars priced £50,000 or more are no longer eligible to receive the grant. The changes are intended to allow more drivers to benefit from making the switch to zero emission vehicles for longer.
In addition, the Chancellor announced the removal of Vehicle Excise Duty (VED) ‘expensive car supplement’ for zero-emission cars with a list price exceeding £40,000, starting from April 2020.