UK’s million or so company car users will escape Benefit-in-Kind tax if they have an electric car in the 2020/21 financial year

Company car users who drive an electric car will not have to pay any Benefit-in-Kind (BiK) tax during the next financial year, after the Treasury reviewed tax rules.

The change follows the introduction of the WLTP (Worldwide Harmonised Light Vehicle Test Procedure) emissions regulations, which are more stringent than the NEDC regime they replaced. Because BiK rates are based on CO2 outputs, and WLTP sees higher on-paper emissions recorded, company car users faced a potentially significant hike in the BiK rates they faced.

To offset that rise, the Treasury has replaced previously published BiK rates for the 2020/21 financial year with new tables that see most BiK percentage bands reduced by two points.

Electric cars were due to get a two per cent BiK rate in 2020/21, so the changes will mean drivers choosing an EV as their company car will pay no Benefit-in-Kind rate whatsoever for that financial year. The tax exemption applies to EVs registered from 6 April 2020, and those registered before that date.

Read more: Auto Express