Government finally announces its plans for the future of fleet

In its long-awaited response to its WLTP review, HM Treasury has scrapped the previously published BIK rates for 2020/21 and created two new BIK tables: one for company cars registered after April 6, 2020, and one for those registered before April 6, 2020.

As a result, says HM Treasury, cars first registered from April 6, 2020, should see a reduction by 2% on most company car tax rates.

At the same time, for a pure EV with zero tailpipe emissions, company car drivers will be taxed at 0%, paying no BIK tax at all. The 0% is also extended to company car drivers in pure electric vehicles registered prior to April 6, 2020, who were already looking forward to a much-reduced rate of 2% for 2020/21.

The 0% rate will also apply to company cars registered from April 6, 2020, with emissions from 1-50g/km and a pure electric mile range of 130 miles or more. Both will then increase to 1% in 2021/22 and 2% in 2022/23.

Pure electric company cars registered before April 6, 2020, will also increase to 1% and 2% in subsequent years, 2021/22 and 2022/23 – giving EV drivers three years of confirmed tax rates.

Company cars registered before April 6, 2020, with emissions from 1-50g/km and a pure electric mile range of 130 miles or more attract a 2% BIK rate in 2020/21 and stay the same for the two subsequent tax years.

In its announcement, the Government said that “by providing clarity of future with the appropriate percentages, businesses will have the ability to make more informed decisions about how they make the transition to zero-emission fleets”.

It added: “Appropriate percentages beyond 2022-23 remain under review and will be announced at future fiscal events.

“The Government aims to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators.”

The Government added that existing vehicle excise duty (VED) rates, which were not part of this review, will stay the same from April 6, 2020, despite the introduction of WLTP values for tax purposes from this date.

The Government says that a call for evidence for VED will be published later this year, seeking views on moving towards a “more dynamic approach to VED”, which recognises smaller changes in CO2 emissions.

From 2023/24, the Government says that fleet managers and company car drivers will be able to refer to a single BIK tax table again as the rates will be realigned.

Please see new tables below: