Despite rising tax bills, company cars remain a popular benefit. The rules for taxing company cars reward employees driving, cheaper, low emission models with a lower tax bill.

After 5th April 2015 electric cars have been taxed according to appropriate percentage for the 0 to 50g/km emissions band (9% for 2017/18, rising to 13% for 2018/19).

Technological advances mean that electric cars are becoming a more viable alternative to petrol and diesel options.  In recognition of this, new appropriate percentage bands are to be introduced from 2020/21 onwards for electric and other ultra-low emission vehicles.

Under the new structure, the percentage applying to cars with emissions of 1 to 50g/km will depend on both the level of the car’s CO2 emissions and also its electric mode.   For vehicles with CO2 emissions of 51g/km and above, the appropriate percentage depends solely on the level of CO2 emissions.

The bands for ultra-low emission cars for 2020/21 on wards are:

CO2 Emissions Electric Range Appropriate Percentage
0g/km 2%
1-50g/km 130 miles or more 2%
70 to 129 miles 5%
40 to 69 miles 8%
30 to 39 miles 12%
Less than 30 miles 14%
51-54g/km 15%
55-59g/km 16%
60-64g/km 17%
65-69g/km 18%
70-74g/km 19%

Thus, a lower tax charge will apply to electric cars with a greater electric range.

When planning ahead for company car changes, it is important to consider the tax implications of any policy and of the models chosen for the car fleet.   Please call us on 01275 852255 for more information.