Company car drivers choosing a pure electric vehicle (EV) will pay no benefit-in-kind (BIK) tax in 2020/21 following a Government review which looks set to boost sales of emissions-free cars.
In its response to its review of the fallout from the roll-out of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) introduced on September 1 last year, and its effect on vehicle taxes, HM Treasury has binned the previously published BIK rates for 2020/21.
In place of the old taxation system it has now created two new BIK tables for company car drivers; a table for those driving a company car registered after April 6, 2020, and one for those driving a company car registered before April 6, 2020.
HM Treasury has said that for cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points.
That means for a pure electric vehicle with zero tailpipe emissions, company car drivers will be taxed at 0%, paying no BIK tax at all. This is particularly great news for companies and employees who have implemented or plan to implement a salary sacrifice scheme
Furthermore, the zero percentage rate 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.
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