Posted on March 12th 2020
Chancellor Rishi Sunak in his first Budget set out a framework for SME fleets and businesses to move towards ultra low emission or zero emission vehicles.
Key points to note for businesses running company cars are:
The company car tax tables announced in summer 2019 have been approved for implementation from April 06, 2020.
Broadly this means:
2020-21 - 2% tax reduction of 2019-20 rates
2021-22 - 1% tax increase
2022-23 - A further 1% tax increase
However, for further certainty, the Chancellor announced that Company Car Tax rates would be held at 2022-23 levels until 2024-25.
Rob Marshall, operations director at Gateway2Lease, commented:
"This is brilliant news for businesses that want to adopt zero emission cars in particular. For drivers of a zero emission electric vehicle, the highest rate of benefit in kind tax during the period up to 2024-25 will be 2%. SMEs should consider their company car options in the light of this."
The Plug-in Car Grant has been retained, however the amount has been reduced from £3500 to £3000 as from midnight on March 11, 2020. Premium cars costing more than £50,000 do not qualify for the grant any more.
Marshall said:
"While the continuation of the grant is to be welcomed, the immediate reduction of grant levels and the exclusion of cars in excess of £50,000 will have an effect on cars ordered that have yet to gain grant approval. It’s a situation we shall monitor and advise clients on the impact where there is one."
While the Chancellor has removed access to the Plug-in Car Grant for premium EVs, he has removed the VED surcharge for electric vehicles that cost more than £40,000.
To ensure no electric car driver is 30 miles from a chargepoint, the Chancellor announced a fund of £500 million for the deployment of rapid chargers over the next five years. Businesses will also be able to access a Rapid Charging Fund that allows them to install rapid chargers at work.
Despite suggestions the freeze may be lifted, the Chancellor has continued with the duty freeze. However, there is every likelihood that in the future, post coronavirus, this will not be the case. "We believe this is a short term policy to combat issues associated with the impact of COVID-19," added Marshall.
"Overall this was a very positive Budget for businesses and business drivers," said Marshall.
"We would encourage all our SME clients to start considering zero emission or plug-in hybrid vehicles for their fleet policies. As well as the financial gains for drivers there are big gains to be made for air quality too.
"If you have any questions regarding a move to electric vehicles, please do not hesitate to contact us at Gateway2Lease. We will be happy to assist you."
Keywords: budget, 2020, business motoring, company car tax, plug-in car grant, VED surcharge removal on EVs, Rapid Charging Fund, fuel duty freeze, contract hire, personal, business, market leading offers, gateway2lease
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