For the 2020/21 tax year, there have been several changes to taxation rules for company cars and vans.
What has happened with CO2 measurements?
From 6 April 2020, CO2 emission measurement will be changed. Any new cars registered on or after that date is determined in accordance with the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). Any cars that have been registered before 6 April 2020 are determined in accordance with the New European Driving Cycle.
What are the different appropriate percentages?
For the year 2020/21, it would be wise to know whether a car was registered before 6 April 2020 or on or after that date. This will allow you to gauge the correct percentage to use when calculating the company car benefit charge.
For all cars that are not zero emission or do not have CO2 emissions of 170g/km and above, the appropriate percentage for cars registered on or after 6 April 2020 with CO2 emissions determined in accordance with the WLTP is two percentage points lower than for a car registered prior to 6 April 2020 are determined in accordance with the NEDC.
For 2021/22, the appropriate percentage for cars registered on or after 6 April 2020 will be one percentage point lower than those registered prior to that date. From 2022/23, the figures will be aligned.
What about Zero emission cars then?
For 2020/21, the charge for zero emission cars will be 0%. This is regardless of anything mentioned above. For 2021/22, it will rise to 1% and up to 2% for 2022/23.
What about cars in the 1-50g/km range?
The appropriate percentage for cars in the 1-50g/km range depends on the cars electric range for 2020/21 onward. This is the case regardless whether the emissions are measured under WLTP or NEDC.
The 1-50g/km range is also then split into five bands according to the car’s electric range (also referred to as its zero-emission mileage). These bands are as follows:
- Greater than 130 miles
- 70 to 129 miles
- 40 to 69 miles
- 30 to 39 miles
- Less than 30 miles
The appropriate percentages range from 2% to 14% for cars registered before 6 April 2020 and from 0% to 12% for cars registered on or after this date, with lower percentages applying to cars within the greatest electric range.
What is the car fuel benefit?
If an employer provides or meets the cost of fuel for a private vehicle, a benefit in kind charge arises, which is calculated by multiplying the appropriate percentage by the multiplier for the year, which is set at £24,500 for 2020/21.
Is there anything different with vans?
There is a flat rate van benefit in kind, and it has been set at £3,490 for 2020/21. The charge for zero emission vans is 80% of the full charge, which is equivalent to £2,792. There is also a fuel benefit charge when fuel is provided for private use of a company van has been set at £666 for 2020/21.
The charge for zero emission vans will be reduced to 0% from 2021/22.
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