Saturday 31st July 2021

HMRC

Something to spark your interest in company cars!

There’s been a lot of adjustment around how company cars are taxed over recent years. For some they are still a popular staff benefit, for others they’re a necessity, but to many they can seem like a rather expensive perk. However things are a-changing, and it may be possible to start offering your eligible employees a less costly version through lower-emission cars very soon.

How so? Let’s have a look at electric cars. The tax rules for electric cars are scheduled to change in 2020, and the update will reduce the taxable amount on some versions to as low as 2% of their list price. Sound good? Read on… Currently, the tax on company cars is calculated as a percentage of their list price, with the actual percentage being determined by their CO2 emissions. Note, the maximum percentage is a whopping 37%!

But how are things going to change for electric cars? It’s good news. At the moment, electric cars with zero emissions are taxed at 13%. When 2020/21 arrives, however, new emission bands will be introduced that are based on an electric car’s range. The greater the range, the lower the percentage tax calculation.

So as you can see, opening your mind to electric cars could be the way forward to putting a bit of shine back into your company benefits package.

Are you ready to spark up?

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