When not debiting or crediting, Keir has a penchant for fixing old buildings, skiing, surfing and cycling. According to data from HMRC in 2017, the number of employees paying company car tax reached a five-year high. Taxation of company cars (CCT) 4.1 The provision of a company car that is available for the employee's private use is treated as a benefit in kind (BIK).3 This is known as Current company car BIK rates start at 0% for pure-electric cars, 3% for new PHEV models, 21% for the greenest hybrids, and 23% for any car with 100 g/km CO2 or more. Reimbursements in excess of the AMAP rates are taxable and must be reported to HMRC. It is planned to change to 1% in 2021/22 & 2% in 2022/23. Make any required deduction for payments by the employee for private use of the car (paragraph 12.36). However, some of these benefits have wider tax implications for the company and employee, such as a company car – which has been a key role in employee benefits packages over the years. For the years up to and including 2010 to 2011 the price of a car at Step 3 was restricted to £80,000. Pure electric cars will not be subject to any Benefit-in-Kind tax at all for 2020/21 – regardless of when the car was registered. For company car drivers and fleet operators choosing an electric car from April 2020, there will be zero tax on Benefit in Kind (BIK) during 2020 / 2021. From 2012 to 2013 onwards there are no longer special rules for qualifying low emission cars. Multiply the figure at Step 3 by the appropriate percentage at Step 4 (paragraph 12.31). Hybrid cars do not qualify as electric cars. This chapter deals with the calculation of the car benefit charge from the same date. From 2009 to 2010 only, if the only car that an employee who holds a disabled person’s badge can drive is one with automatic transmission, the price of the car is the list (or notional, where appropriate) price of the closest manual equivalent, which is: A qualifying accessory is an accessory which is: (a) Made available for use with the car without any transfer of the property in the accessory. For the 2019-20 tax year, hybrid and electric car benefit-in-kind rates were hiked up significantly. From 2020 to 2021 onwards, you may need some additional information to find the correct appropriate percentage for the car. We use cookies to collect information about how you use GOV.UK. (c) Within a period of 30 or more consecutive days throughout which the car is not available to the employee. The lower limit of £100 means that inexpensive accessories which are made available during the period are not included in the benefit charge. He also helps the accounting teams strive to improve what we do for clients, whether processes or services. This growth is likely to continue as more people try to move away from fossil fuels, which is being incentivised by the Government. Due to their lower tailpipe CO2 emissions, car tax for hybrid cars is generally lower than it would be for a non-hybrid model. Information on CO2 emissions for both new (unregistered) and used (registered) cars can be found on the car fuel and CO2 emissions data page. Electric cars and employees ... Until 5 April 2018, if an employer provided electricity to charge an employee’s personal car then a taxable benefit in kind would arise. However, this option tends to put an additional burden on the employee as they have to maintain the car and track business mileage. Where an employee has 2 or more cars made available at the same time each car has to be considered separately. For employers looking into electric company cars, there are now considerable savings to be made. Any payments which the employee makes specifically for the private use of a replacement car as described in paragraph 12.35 are allowed as though they were payments for the private use of the normal car in that period. A replacement accessory is an accessory which replaces another qualifying accessory (‘the old accessory’) and is of the same kind as the old accessory. If you find a larger discrepancy then contact HMRC for advice. For example, a diesel engine company car with CO2 emissions of 120g/km would have a company car tax percentage of 33 per cent from April 2020. It makes the arguments for a company car alternative look shaky at the very best. Electric cars are exempt from Vehicle Excise Duty – otherwise known as road tax – and for the 2020/21 financial year, beginning 6 April 2020, they're exempt from company-car tax, too. 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