Hybrid cars – changes afoot

Date posted: 16th Nov 2018

Over the years, the government have continued to increase the tax charges associated with company cars, particularly those company cars running on petrol and diesel.

The tax charge, if you aren’t aware, basically follows the simple rule that the higher the carbon dioxide emissions of a vehicle, the higher the tax charge.

This has led many businesses to consider alternative fuel cars and many employees have begun to use hybrid cars to take advantage of the lower personal taxes.

However, the tax rates of ultra-low emission vehicles (ULEVs) has began to steadily increase and there has been a rise in the taxes payable by an individual with a company car. For example, a petrol hybrid car emitting 75 g/km of carbon dioxide had a taxable benefit value of 5% (of original cost) in 2013/14 but this will have quadrupled to 20% in 2020/21.

Changes from April 2020 will mean that the taxable benefit associated with lower emission hybrid cars will depend upon the range (in miles) of the car in the pure electric mode. Quite simply, the bigger the range, the lower the tax charge.

This is summarised in the table (for hybrids) only:

For example, the Volkswagen e-Golf is believed to have a capability of more than 130 miles on full charge which means that the taxable benefit associated with the car would be 2% from April 2020. Whilst the list price may be £30,000, this would only be a taxable benefit of £600 per annum.

It is important that any employer is aware of the forthcoming changes and considers this well ahead of any changes planned to the company car fleet. It may be worth considering moving to hybrid cars or perhaps a pure electric car.

Give us a call, if you have any queries.

Building better business

Keep Informed: enter your email...

Our Clients Include: