Changes to company car benefits rates for 2020-21
15 July 2019
The UK is adopting the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) to establish the carbon dioxide (CO2) emissions figures for all new cars registered from 6 April 2020. This means that the taxable benefit in kind figure for new company cars will be based on the new emissions figures.
The WLTP emissions figures are likely to be higher for most petrol/diesel vehicles because they reflect ‘real world’ driving conditions. The taxable benefit of company car drivers would also be likely increase for newly registered vehicles. To prevent this, the Government will introduce a new set of benefit rates for all new cars registered from 6 April 2020. These rates will generally be reduced by 2% for 2020/21 so that there is no distorting effect on the car market. In subsequent tax years this reduction will be phased out so that benefit rates go back to their pre-announced rates by 2022/23. The car benefit rates for vehicles registered before 6 April 2020 will remain at their pre-announced rates.
For zero emissions vehicles, the benefit in kind percentage (16% for 2019/20) will be reduced to nil for 2020/21, 1% for 2021/22 and 2% for 2022/23. As the Government has recently reduced the grant available to purchasers of zero emissions vehicles, it is assumed that the benefit in kind reduction is intended to offset the impact on UK sales.