Taxable benefits and rules for measuring CO2 emissions

11 July 2019

Measures on ‘Taxable benefits and rules for measuring carbon dioxide emissions’ which were first announced in Budget 2017, have been confirmed in the 2019-20 Finance Bill and will have effect from 6 April 2020.


  • For cars first registered from 6 April 2020, most company car tax rates will be reduced by 2ppt in 2020-21 before returning to planned rates over the following two years – increasing by 1ppt in 2021-22 and 1ppt in 2022-23.

  • To accelerate the shift to zero-emission cars, all zero-emission models will pay no company car tax in 2020-21, 1% in 2021-22 before returning to the planned 2% rate in 2022-23.


The changes follow a review into the impact of the Worldwide harmonised Light vehicles Test Procedure (WLTP) on Vehicle Excise Duty and company car tax.


With regard to Vehicle Excise Duty, a call for evidence will be published later this year seeking views on moving towards a more dynamic system which recognises smaller differences in carbon dioxide (CO2) emissions.


The amendments also clarify that, for the purposes of CCT and related charges, cars first registered on or after 1 October 1999 but before 6 April 2020 will continue to be taxed on the basis of the CO2 emissions figure measured under the NEDC procedure.


The legislation remains unchanged for cars first registered before 1 October 1999.