Government provides welcome boost to the company car market

The BVRLA has welcomed today’s announcement from HM Treasury confirming the government’s decision to freeze company car tax. A move set to benefit just under a million company car drivers.

Those with vehicles registered before 6 April 2020 will see their company car tax bands being frozen at the 2020/21 rates until 2022/23. Those registering new cars after 6 April 2020 will also be rewarded with a two-percentage point tax cut. It will also see all zero-emission company cars paying no tax.

After the two-percentage point decrease in 2020/21, CCT rates will then increase by one percentage point in 2021/22 and 2022/23.  The government has also confirmed that it will aim to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers, employees and fleet operators

The announcement came in the government’s response to the recent Review of WLTP and Vehicle Taxes following an extensive consultation with industry, taking in the views of BVRLA members and other industry colleagues seeking support for the company car market.

As well as providing a welcome boost to company car drivers, Treasury has also acknowledged the value of the company car market in supporting the transition to zero emission technology.

BVRLA Director of Policy and Membership, Jay Parmar said:

“The Government has responded positively to the Company Car Tax campaign mounted earlier this year by the BVRLA, its members and fleet industry colleagues. Our regular engagement with policymakers is clearly paying off as there now appears to be a greater appreciation for the importance of our industry in delivering government’s wider economic and environmental ambitions.

“Recognising the value of the company car market in supporting the transition to zero emission technology is also a positive endorsement for our sector, showing refreshing alignment between government’s environmental and fiscal policies.

“The Treasury is giving back some of the unfair Company Car Tax windfall it was set to receive as a result of WLTP and providing some essential extra visibility on future tax costs for those looking to order their next vehicle. This is a good day for company car drivers and our members.”

Today’s changes do not affect the Lease Rental Restriction, Capital Allowances or any other CO2 related taxes and incentives but will include fuel benefit charge.

The Government has missed an opportunity to make any WLTP-related adjustments to VED bands, although the BVRLA does acknowledge that there will be a call for evidence to look at the benefits of introducing more granular VED CO2 bands in the future.