Government announces response to WLTP

Government announces changes to WLTP

Earlier this week the government confirmed the long-awaited response to its review of WLTP and company car tax, announcing a freeze on company car tax as well as a zero Benefit-in-Kind (BIK) rate for fully electric vehicles.

The announcement gives clarity to fleet managers and company car drivers, which has been long overdue. Those drivers with vehicles registered before 6 April 2020 will see their company car tax bands frozen at the 2020/21 rates until 2022/23.  Those registering new cars after 6 April 2020 will also be rewarded with a 2% tax cut. And for those choosing to drive a pure electric vehicle, in 2020/21 they will pay no BIK in an attempt to boost sales of emission free cars.

The HM Treasury has created two new BIK tables, which can be seen below. From 2023/24, fleets will have one BIK tax table again as the rates are realigned.

Company car tax for cars registered before April 6 2020

Company car tax for cars registered after April 6 2020

As part of the announcement the Government confirmed they aim to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators. By providing clarity of future the appropriate percentages, businesses will have the ability to make more informed decisions about how they make the transition to zero emission fleets”.

Lee Hamlett, Commercial Director at KINTO commented on the announcement “There has been much uncertainty within the market, with SMMT data reporting car fleet registration volumes reducing, so it’s positive to see that Government has provided the much needed clarity on Company Car Tax for the coming years.

Its commitment to help mitigate the impact of WLTP and CO2 emissions for cars, supported by the introduction of the zero BIK rate in 2020 for electric vehicles is very promising and shows recognition that the company car market plays a pivotal role on the Road to Zero.

This clarity provides the right visibility on future tax costs for those looking to order their next company car and will help drive demand for more environmentally friendly vehicles.”

To discuss this topic in further detail and how these changes may impact your fleet, contact one of our fleet experts.