12 July 2019
Company car tax rates 2020/21 to 2022/23
Company car benefit-in-kind tax rates for the three years 2020/21 to 2022/23 have been announced by the Government.
The announcement, which sees company car benefit-in-kind tax rates for zero emission cars in 2020/21 cut to 0% from the previously announced 2% but all other already published rates remaining unchanged for cars registered before April 6, 2020, sees reduced rates for cars first registered from April 6, 2020.
The twin-track approach will remain in place for the two financial years 2020/21 and 2021/22 before company car benefit-in-kind tax rates realign in 2022/23 (see tables below).
Figures for 2023/24 and beyond have not been published and, said the Government, "remained under review". It said it would "aim to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators". Therefore, it can be anticipated that 2023/24 company car benefit-in-kind tax rates will most likely be announced in the Budget in November 2020.
In announcing the new rates, the Government said it "recognised the value of the company car market in supporting the transition to zero emission technology. This is reflected in a higher proportion of company cars with zero emissions - compared to private registrations - and the high proportion of these that are subsequently supplied to the second-hand market after three-four years".
The Government added: "By providing clarity of future appropriate percentages, businesses
Will have the ability to make more informed decisions about how they make the transition to zero emission fleets."
The announcement follows a Government review of both company car benefit-in-kind tax and Vehicle Excise Duty in the wake of last year's introduction of the Worldwide harmonised Light vehicles Test Procedure (WLTP). The new vehicle emissions and fuel economy testing regime replaced the long-established New European Driving Cycle (NEDC) test.
In the 2017 autumn Budget, the Government announced that cars registered from April 2020 would be taxed according to WLTP carbon dioxide (CO2) emission figures.
Previously published motor manufacturer emission figures highlighted that WLTP values would be higher than NEDC values. As a result the review was ordered by ministers.
Review respondents provided data showing increases in CO2 values ranging from 7% to 40% as a consequence of testing under WLTP rules. On average, WLTP results were about 20%-25% higher than NEDC figures with cars with smaller engines, and lower emissions, impacted the most and diesel cars slightly more than petrol models.
The Government said that "significant evidence was not provided" during its review to "suggest that WLTP would cause individuals to opt-out of company cars".
Industry organisations had lobbied for the recalibration of company car benefit-in-kind tax rates to be neutral - the Government is to maintain existing Vehicle Excise Duty rates on introduction of WLTP-based taxation from April 2020 (see below).
In the review document, the independent Office for Budget Responsibility calculated that company car tax receipts would increase by £100 million in 2020-21, rising to £400 million in 2023/24.
The key company car benefit-in-kind tax decisions announced by the Government are that:
- To accelerate the shift to zero emission cars, all zero emission models will be 0% rated in 2020/21, 1% in 2021/22 before returning to the planned 2% rate in 2022/23
- For all other cars first registered before April 6, 2020 rates for 2021/22 and 2022/23 will be frozen at previously announced 2020/21 levels
- For cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points in 2020/21 compared to those registered before April 6, 2020 before returning to planned rates over the following two years - increasing by one percentage point in 2021/22 and a further one percentage point in 2022/23.
In announcing the changes the Government said it "recognised that WLTP represented a significant change to the vehicle tax system and was aiming to support the automotive tax sector - and protect consumers - during the transition".
The Government response continued: "Due to the range of WLTP impacts on CO2 emissions, this approach means some conventionally fuelled cars will be liable to pay an equal amount of company car tax as today, whilst others will pay more, and a smaller number of models could pay less."
Legislation to implement the changes relating to cars registered from April 6, 2020 will be included in the 2019/2020 Finance Bill slated to be start its path through Parliament on Thursday, July 11.
Company car benefit-in-kind tax rates for cars first registered before April 6, 2020
|
% of P11D price |
2019/20 CO2 g/km |
2020/21 CO2 g/km/(electric mileage range) |
2021/22 CO2 g/km/(electric mileage range) |
2022/23 CO2 g/km/(electric mileage range) |
|
0 |
N/A |
0 |
N/A |
N/A |
|
1 |
N/A |
N/A |
0 |
N/A |
|
2 |
N/A |
1-50 (up to 130 miles |
1-50 (up to 130 miles |
0-50 (up to 130 miles |
|
5 |
N/A |
1-50 (70-129 miles) |
1-50 (70-129 miles) |
1-50 (70-129 miles) |
|
8 |
N/A |
1-50 (40-69 miles) |
1-50 (40-69 miles) |
1-50 (40-69 miles) |
|
12 |
N/A |
1-50 (30-39 miles) |
1-50 (30-39 miles) |
1-50 (30-39 miles) |
|
14 |
N/A |
1-50 (under 30 miles) |
1-50 (under 30 miles) |
1-50 (under 30 miles) |
|
15 |
N/A |
51-54 |
51-54 |
51-54 |
|
16 |
0-50 |
55-59 |
55-59 |
55-59 |
|
17 |
N/A |
60-64 |
60-64 |
60-64 |
|
18 |
N/A |
65-69 |
65-69 |
65-69 |
|
19 |
51-75 |
70-74 |
70-74 |
70-74 |
|
20 |
N/A |
75-79 |
75-79 |
75-79 |
|
21 |
N/A |
80-84 |
80-84 |
80-84 |
|
22 |
76-94 |
85-89 |
85-89 |
85-89 |
|
23 |
95-99 |
90-94 |
90-94 |
90-94 |
|
24 |
100-104 |
95-99 |
95-99 |
95-99 |
|
25 |
105-109 |
100-104 |
100-104 |
100-104 |
|
26 |
110-114 |
105-109 |
105-109 |
105-109 |
|
27 |
115-119 |
110-114 |
110-114 |
110-114 |
|
28 |
120-124 |
115-119 |
115-119 |
115-119 |
|
29 |
125-129 |
120-124 |
120-124 |
120-124 |
|
30 |
130-134 |
125-129 |
125-129 |
125-129 |
|
31 |
135-139 |
130-134 |
130-134 |
130-134 |
|
32 |
140-144 |
135-139 |
135-139 |
135-139 |
|
33 |
145-149 |
140-144 |
140-144 |
140-144 |
|
34 |
150-154 |
145-149 |
145-149 |
145-149 |
|
35 |
155-159 |
150-154 |
150-154 |
150-154 |
|
36 |
160-164 |
155-159 |
155-159 |
155-159 |
|
37 |
165+ |
160+ |
160+ |
160+ |
For each tax year add 4% for diesel cars up to a maximum of 37%. Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt.
Company car benefit-in-kind tax rates for cars first registered from April 6, 2020
|
% of P11D price |
2020/21 CO2 g/km/(electric mileage range) |
2021/22 CO2 g/km/(electric mileage range) |
2022/23 CO2 g/km/(electric mileage range) |
|
0 |
0-50 (up to 130 miles |
N/A |
N/A |
|
1 |
N/A |
0-50 (up to 130 miles |
N/A |
|
2 |
N/A |
N/A |
0-50 (up to 130 miles |
|
3 |
1-50 (70-129 miles) |
N/A |
N/A |
|
4 |
N/A |
1-50 (70-129 miles) |
N/A |
|
5 |
N/A |
N/A |
1-50 (70-129 miles) |
|
6 |
1-50 (40-69 miles) |
N/A |
N/A |
|
7 |
N/A |
1-50 (40-69 miles) |
N/A |
|
8 |
N/A |
N/A |
1-50 (40-69 miles) |
|
10 |
1-50 (30-39 miles) |
N/A |
N/A |
|
11 |
N/A |
1-50 (30-39 miles) |
N/A |
|
12 |
1-50 (under 30 miles) |
N/A |
1-50 (30-39 miles) |
|
13 |
51-54 |
1-50 (under 30 miles) |
N/A |
|
14 |
55-59 |
51-54 |
1-50 (under 30 miles) |
|
15 |
60-64 |
55-59 |
51-54 |
|
16 |
65-69 |
60-64 |
55-59 |
|
17 |
70-74 |
65-69 |
60-64 |
|
18 |
75-79 |
70-74 |
65-69 |
|
19 |
80-84 |
75-79 |
70-74 |
|
20 |
85-89 |
80-84 |
75-79 |
|
21 |
90-94 |
85-89 |
80-84 |
|
22 |
95-99 |
90-94 |
85-89 |
|
23 |
100-104 |
95-99 |
90-94 |
|
24 |
105-109 |
100-104 |
95-99 |
|
25 |
110-114 |
105-109 |
100-104 |
|
26 |
115-119 |
110-114 |
105-109 |
|
27 |
120-124 |
115-119 |
110-114 |
|
28 |
125-129 |
120-124 |
115-119 |
|
29 |
130-134 |
125-129 |
120-124 |
|
30 |
135-139 |
130-134 |
125-129 |
|
31 |
140-144 |
135-139 |
130-134 |
|
32 |
145-149 |
140-144 |
135-139 |
|
33 |
150-154 |
145-149 |
140-144 |
|
34 |
155-159 |
150-154 |
145-149 |
|
35 |
160-164 |
155-159 |
150-154 |
|
36 |
165-169 |
160-164 |
155-159 |
|
37 |
170+ |
165+ |
160+ |
For each tax year add 4% for diesel cars up to a maximum of 37%. Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt.
Vehicle Excise Duty rates from April 2020
The Government has announced that existing Vehicle Excise Duty rates will be maintained on introduction of WLTP from April 2020 (see table below).
Later this year it will publish a call for evidence seeking views on moving towards a more dynamic approach to Vehicle Excise Duty which recognises smaller differences in CO2 emissions.
Justifying future changes to the current Vehicle Excise Duty regime the Government said that WLTP testing resulted in "many more unique CO2 values, mainly due to model-specific testing".
As a result, the current Vehicle Excise Duty system was likely to result in "differences between models not being fully recognised in the Vehicle Excise Duty rates paid". Consequently, it said: "This could exacerbate the current 'cliff-edges' between Vehicle Excise Duty bands."
Vehicle Excise Duty for cars first registered from April 1, 2019
|
Emissions (g/km) of CO2 |
First year rate petrol cars and RDE2 standard diesel cars |
First Year non-RDE2 diesel cars |
Alternative fuel diesel cars |
|
0 |
£0 |
£0 |
£0 |
|
1-50 |
£10 |
£25 |
£0 |
|
51-75 |
£25 |
£25 |
£15 |
|
76-90 |
£110 |
£130 |
£100 |
|
91-100 |
£130 |
£150 |
£120 |
|
101-110 |
£150 |
£170 |
£140 |
|
111-130 |
£170 |
£210 |
£160 |
|
131-150 |
£210 |
£530 |
£200 |
|
151-170 |
£530 |
£855 |
£520 |
|
171-190 |
£855 |
£1,280 |
£845 |
|
191-225 |
£1,280 |
£1,815 |
£1,270 |
|
226-255 |
£1,815 |
£2,135 |
£1,805 |
|
Over 255 |
£2,135 |
£2,135 |
£2,125 |
Rates for second tax payment onwards for cars registered after April 1, 2017
|
Fuel type |
12 month rate |
|
Petrol or diesel |
£145 |
|
Electric |
£0 |
|
Alternative fuel |
£135 |
Cars with a list price above £40,000 pay a £320 supplement for five years from the second time the vehicle is taxed.
Vehicle Excise Duty from April 1, 2019 for cars registered between March 1, 2001 and March 31, 2017
|
VED Band |
CO2 emissions (g/km) |
Standard rate* |
|
A |
Up to 100 |
£0 |
|
B |
101-110 |
£20 |
|
C |
111-120 |
£30 |
|
D |
121-130 |
£125 |
|
E |
131-140 |
£145 |
|
F |
141-150 |
£160 |
|
G |
151-165 |
£200 |
|
H |
166-175 |
£235 |
|
I |
176-185 |
£260 |
|
J |
186-200 |
£300 |
|
K** |
201-225 |
£325 |
|
L |
226-255 |
£555 |
|
M |
Over 255 |
£570 |
*Alternative fuel discount 2019/20 £10 all cars
**Includes cars emitting over 225 g/km registered before March 23, 2006.
