If you are changing your company car soon you need to get on top of the new tax rules.
CO2 emissions have been the basis of company car taxation for over 15 years, with each new tax year usually seeing a nudge up in the scale charge for most emission levels. However, from 6 April 2020, the tax scales undergo a more radical set of changes:
- For newly registered cars, the ‘real world’ WLTP measure of CO2 emissions will replace the existing and largely discredited NDEC basis (which will still stand for older vehicles). WLTP emission results are on average 20%–25% higher than NDEC figures.
- For all hybrid cars with CO2 emissions of 1–50g/km, the scale charge will take account of the electric-only range.
- The scale charge for zero-emissions cars will itself be nil in 2020/21, rising by 1% a year in the next two tax years.
From January 2021, all newly registered diesel cars must meet the RDE2 emissions standard, which exempts them from the current 4% diesel surcharge.
The government has already published revised company car tax scales for the next three tax years (2020/21 – 2022/23), which take account of the reforms. In 2020/21, most of the scales will begin 2% lower than originally legislated for because of the sharper than anticipated increases in emissions under WLTP.
Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
This article is for general information purposes only and for specific tax advice please refer to a tax specialist