Changes to the UK’s company car tax system will mean drivers choosing a pure electric car pay no benefit-in-kind charges from next year.
After a review of the industry changes brought about by the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) emissions regulations, the Treasury has axed its previously published rates in favour of a new system.
It will mean that, for cars registered from April 6th next year, most benefit-in-kind rates will be reduced by two percentage points over the current system. For EVs, that means a zero percentage rate, which is also extended to vehicles registered prior to April 6th.
That figure will also apply to hybrids and plug-in hybrids that are capable of 130 miles or more of pure electric range, with official CO2 emissions of between 1-50g/km - although no such models currently exist in the UK market.
However, the free ride won’t last long for EV users. Current plans are for the 0 percent rate to increase to 1 percent by 2021/22 and 2 percent in 2022/23, although the government says they 'remain under review'.
In a statement the government claims the new figures will give businesses “the ability to make more informed decisions about how they make the transition to zero-emission fleets”.