New 2020 Tax Rules Affect Company Car Drivers

From 6 April 2020 the taxable benefit rates for company cars will change significantly.

There'll be a particular emphasis on reducing the company car benefit for electric cars and hybrids, both of which will enjoy much lower company car taxes.

However, many other company cars will incur higher rates of tax for their drivers.

This is due to the adoption of the WLTP system for measuring CO2 output, which typically gives a higher CO2 output compared to the 'old' NEDC system.

Despite the changes though, thousands of cars with the highest levels of CO2 output will actually benefit from the new 2020 company car tax system.

This is because the tax rules place a cap the CO2 output used to calculate company car benefit.

Cars with an already capped CO2 output will see no change in their company car benefit in 2020, with the taxable benefit remaining at 37% of taxable list price (or P11D value).

Quirk In Tax Rules for April 2020

Unfortunately there's also a quirk in the tax rules which could have a significant impact for a small number of company car drivers whose cars are due for replacement in the last few days of the 2019 tax year.

The 2019 tax year ends on 5 April 2020, but the new WLTP system for recording CO2 output actually starts 5 days earlier on 1 April 2020.

As of 1 April 2020 the Vehicle Certification Agency (the body responsible for managing the technical certification of cars in the UK) will start to use the WLTP system for recording the CO2 output of all cars.

Now, company car benefit is calculated from the CO2 value recorded on the V5 registration document (have a look at sections 12.22 and 12.23 of HMRC's guidance on company car benefit, and this value will be the WLTP CO2 figure from 1 April 2020.

As a result, cars registered between 1 and 5 April 2020 could have a higher CO2 output that they would under the 'old' NEDC system, and therefore carry a higher company car tax liability, despite the cars being registered before the start of the 2020 tax year (which is when the WLTP system is generally supposed to start operating for company cars).

However, the opposite also applies for cars with a lower CO2 output under WLTP - these cars will have a lower taxable benefit, though the number of affected cars is much smaller.

Will My New Company Car Be Affected?

To see which cars are affected by the changes for electric and hybrid cars and the WLTP swap for CO2, we've put together The 2020 List.

Our list provides the CO2 output and taxable benefit for company cars under the 2019 and 2020 tax systems and the change in taxable benefit for cars registered from 6 April 2020.

Select a manufacturer from the list below and we'll show the company car benefit impact for each car model where we've been able to get the new WLTP CO2 data.

Keep checking back - we'll add more cars as WLTP CO2 data becomes available.