Company car tax charges are changing from April 2020. It’s definitely worth looking at the new rules and possibly delaying a vehicle change until April.
Any car powered wholly by electricity will have a zero tax charge from April 2020. That’s a great improvement over the benefit in kind tax charge currently applying to petrol or diesel cars.
But there’s more!
Any hybrid, registered on or after 6 April 2020, which has emissions up to 50g/km and can be driven solely on electrical power for at least 130 miles will also carry a zero tax charge.
There will also be lower rates for cars with emissions up to 50g/kg which can’t meet the 130 mile test. There are several bands with different tax rates applicable to these types of vehicle.
Because the value of the benefit will be greatly reduced, the amount of Class 1A National Insurance will also reduce.
Usually it is not sensible for an employee to let an employer pay for fuel for private journeys because of the tax charge. However, from April, if the rate or 0% tax on a vehicle applies, this will also apply to the provision of fuel – so the provision of fuel can become a worthwhile benefit.
Note that this is being written quite a long time before April 2020 and there could be changes to legislation before April. Do not completely rely on this article when making a decision about a new car. Check before you buy. You can ring us (01509) 816150, use our Enquiry Form or check with HMRC.
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