There was an understandable degree of excitement when HMG announced the new company car tax rules yesterday. However, arguably the changes amount to little more than moving the deck chairs.
We believe the biggest news is that the CO2 scale charge escalator has finally stopped (presumably to save energy) for conventional engine cars, meaning the next 3 year’s tax charge will be static. However, you could argue the escalator was already very close to the top!
HMG have confirmed some respite for the new WLTP testing regime coming in from next year. However, the 2% reduction equates to just 10g/km of CO2 in 2020/21 and a 1% reduction to just 5g/km in 21/22.
For full electric cars the 2% rate is reduced to ZERO in 2020/21 (1% in 2021/22, and 2% in 2022/23) turning a great deal into an incredible one. If you are driving 25,000 business miles a year in a diesel Passat company car, you may be wondering what the fuss is all about. For 120g/km the scale charge is 32% already (over £300 pcm for a 40% taxpayer). Someone who can afford a Tesla might pay no tax next year, £20 a month the year after, and then £40 a month the year after that which, I imagine, won’t worry them a jot.