Taxing times for drivers
In the Spring Budget, the Chancellor announced revisions to company car tax rates to encourage drivers into ultra-low emission vehicles. But these changes need to be viewed alongside others. Any firms compiling company car choice lists should take into account the length of vehicle replacement cycles and alert their drivers of the changes and potential financial cost of picking certain vehicles.
For company car drivers selecting sub-100g/km vehicles, the tax burden will be eased in 2020/21. Simultaneously, the government is introducing a mileage range element to the tax system for plug-in hybrid cars: currently there are none on sale in the UK with an electric mileage range of 40 miles or more. This means they are excluded from the three lowest CO2/electric mileage range tax brackets in 2020/21, preventing drivers from benefiting from even greater tax savings. If a plugin hybrid car was to be launched with a range of 130 miles or more and CO2 emissions of 1-50g/km the benefit-inkind tax burden in 2020/21 would be 2% - a 7% point saving versus 2017/18 and a 14% point saving versus 2019/20.