Government drafts 2020-21 company car tax bands

The government has published draft legislation for new company car tax bands that would come into force from 2020. These bands would see drivers with fully electric cars paying much reduced tax rates, while those with high-emissions vehicles can expect bigger bills.

A sliding scale for vehicles that emit 1-50g/km of CO2 – a group that currently consists of plug-in hybrid vehicles – will also be introduced, varying depending upon vehicles’ zero-emission range. This means that the further these vehicles can travel on electric power alone without any tailpipe emissions, the lower their tax charges will be.

Should these rates come into force, those with zero-emissions cars would see their tax liability fall from the current 7% band – rising up to 16% in 2019-20 – to a new 2% rate. Meanwhile, those with a typical diesel Audi A4 which emits 99g/km, for instance, would see their tax rise from 19% this tax year to 26% in 2019/2020, before dropping back to 24% when the new system comes in.

Cars that emit 1-50g/km will fall into several bands, depending upon how far they can travel on electric – or other zero-emisison – power. These start at 2% for those that can cover more than 130 miles with no emissions, rising to 14% for those that can cover less than 30 miles.

Vehicles emitting 51-54g/km will be taxed at 15%, with an additional percentage point added for every further 5g/km. The maximum rate continues to be 37% and will apply to cars that emit more than 160g/km. See the full rundown of proposed 2020-21 tax bands below:

2020-21 company car tax bands