Car and car fuel benefit calculation to change

25 October 2019

In a move to encourage the shift to more environmentally-friendly vehicles, new calculation bands will be implemented from April 2020.

HMRC has confirmed that, in order to reflect ever-changing society, there will be 11 new bands for Ultra Low Emission Vehicles (ULEVs) from April 2020 onwards, that will be incorporated on a separate table. This will also herald the inclusion of a separate zero emissions band.

The move was proposed in order to reiterate the government’s guarantee that they will aim to improve air quality and reduce pollution across the UK and to encourage people to invest in more environmentally friendly vehicles.

The guidance issued by the Software Developers Support Team (SDST) includes a ready reckoner and flow chart to help with the arduous task of applying the correct percentage bracket to Company Car Benefits.

It was announced by HMRC that company car drivers using zero emission cars will pay no company car tax from 2020-2021.  This is an initiative that is being put into place in order to influence people to shift to the use of zero emission cars in a bid to help the environment. In 2021-22, the tax rate will increase to one percent before returning to the planned two percent in 2022-2023.

 


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