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If you drive a company car, then you need to be aware of new emissions tests being introduced in April 2020, as these will have implications on how much tax you pay.
When a car is provided to an employee by their employer and is available for personal use, then the employee must pay some tax on the benefit that they receive from this perk.
Back in 2017, the Government confirmed that from the 2020/21 tax year, the car benefit system will be changing to make zero and low emission vehicles more attractive.
And as part of its shift towards greener motoring in the UK, April 6 will see the introduction of the Worldwide harmonised Light vehicle Test Procedure (WLTP).
Hailed as being more accurate than the current New European Driving Cycle (NEDC) test, it is expected to show higher levels of vehicle carbon dioxide (CO2) emissions.
However, this only relates to new cars and any car registered before April 6, 2020, will continue to have its emissions measured under the existing NEDC tests.
Zero-emission car drivers have zero company car tax
If you've been thinking about switching to a zero-emission car, now is the time to do it! To accelerate the shift to zero-emission cars, all zero-emission Pure Electric Vehicles (PEVs) models, regardless of when they were registered, will be subject to a 0% rate.
Drivers of these PEVs will pay no company car tax in 2020/21, rising by 1% in each of the following two tax years.
Powered by batteries
Reduced percentages will apply to lower emission cars and new bands are introduced for hybrid vehicles with emissions up to 50 g/km (depending on how far the hybrid vehicle can travel solely under electric power).
What types of vehicle are available?
- Pure electric vehicles (PEVs) use rechargeable batteries and run solely from electrical power rather than an internal combustion engine and are zero-emission vehicles.
- A hybrid electric vehicle (HEV) uses power from two sources, petrol or diesel and electric. HEVs switch between the two motors and generally have a small electric-only range of a few miles.
- Plug-in hybrid electric vehicles (PHEVs) recharge their batteries from an electrical source. These vehicles have a higher electric-only range.
Check our other useful tax resources here https://bit.ly/38JxY3r and the tax implications for company cars on the Next Green Car website https://www.nextgreencar.com/company-car-tax/
Why Giltinan and Kennedy?
We pride ourselves on being one step ahead of the changes in legislation which affect you and your business. As a small business, we know how financial pressures can impact negatively on your wellbeing and how great it feels when someone 'has your back'.
Working with me and my hand-picked team, you have access to my many years' experience as a financial accountant and small business owner. You will feel supported every step of your business journey.
We can:
- ensure you save on tax costs and pay competitive fees for your accounts
- provide a complete, objective, service, with the benefit of calling on our wide range of professional partners
- be proactive, ensuring we are up to date with the latest changes and legislation
- offer a fixed fee tax return service to help you budget.
And if you recommend us to a friend and they go ahead and work with us, we'll make a £50 donation to the charity of your choice.
Why me?
I understand the pressures you face and I tailor my services to meet your changing needs.
As well as general accountancy and extensive tax skills, myself and another partner also have individual specialist skills which enable us to provide you with a comprehensive, first-class service.
This means that you can stop worrying about your finances and instead be reassured that your accounts and any tax work will be carried out by my qualified and experienced accountants. They will never be delegated to unqualified staff or subcontracted, as is increasingly the case with other practices.
I provide a high quality service at a reasonable price, within budget. There are no hidden extras and we agree all fees in advance. Get in touch with me on 01403 337490.