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As we enter the New Year businesses are calling for clarity from the newly elected Government on changes to company car tax rates due this April.

Planned changes to company car were announced last July following the results of the WLTP review in the October 2018 Budget.

This explored the impact that the new emissions testing cycle will have on company car tax and vehicle excise duty (VED) when it is implemented for tax purposes from April 2020.

Changes to company car tax from 2020/21 – including the 0% rate for EVs – were put on hold when last Autumn’s Budget was shelved for the election.

Results of the review also included a freeze on company car tax at the 2020/21 rates for those drivers with vehicles registered before 6 April 2020.

Process has stalled

However, the process has stalled as any changes to company car tax still require progression to a Finance Bill following the election – and the Christmas break has further held things up.

Fleet operators and businesses are urging the Government to clarify plans and take urgent action on advancing the new rates.

ACFO chairman Caroline Sandall said: “Given the shelving of the autumn Budget and the close proximity of the new tax year, ACFO would hope that the Chancellor will announce company car Benefit-in-Kind tax rates for 2023/24 and 2024/25 in a winter Budget to enable long-term fleet manager and company car driver planning.”

ICFM Chairman Paul Hollick said that the newly elected Government should immediately  declare a five-year 0% Benefit-in-Kind tax rate for 100% electric vehicles, and, over a similar period, a £0 Vehicle Excise Duty rate for cars with CO2 emissions up to and including 50g/km.

Capital allowances

He also called for capital allowances for contract hire and leasing companies on plug-in vehicles to be brought into line with those for outright purchase fleets.

Hollick added: “This would at least provide a five-year window of taxation certainty to enable fleet decision-makers and drivers to plan without fear of any policy short-termism.”

The ICFM also wants the new Government to take action to halt the migration of employees out of company cars due to short-sighted Benefit-in-kind tax strategies.

Hollick said: “Evidence suggests that when opting out of company car schemes employees fund a car that has higher CO2 emissions than the company-provided vehicle they gave up.”


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