Chancellor Philip Hammond announced plans to axe some salary sacrifice perks from next April in his Autumn Statement, but electric vehicles are among the exceptions.
He backed recent HMRC proposals for a crackdown on more frivolous uses of the loophole, such as smartphone and gym contracts, buying cars and TVs and taking out private medical insurance. But work-related benefits deemed more worthy, like pension saving and advice, childcare, bicycles and low-emission cars, will still be allowed.
A shaky future for Hybrids?
Company car tax from April 2020 will incentivise ultra-low emission vehicles based on their electric range, with fully-electric models getting their own Benefit in Kind band.
Announced during today’s Autumn Statement, it reintroduces a BiK band for 0g/km vehicles which had been removed last April, and adds a sliding scale for plug-in hybrid and range-extended electric models which emit 50g/km or less.
Replacing a single sub-50g/km band, it follows a consultation process announced in August which was aimed at providing “a clear incentive for manufacturers to move beyond vehicles with reduced CO2 emissions but limited electric mile range, which risk being driven in combustion engine mode most of the time.”
From April 2020 the following will apply:
- Fully-electric cars will be taxed at 2%
- Vehicles emitting between 1g/km and 50g/km – plug-in hybrids and range-extenders – will vary, with BiK bands between 2% and 14% depending on how far they can travel on battery power.
- There will be a one percentage point increase per band, up to a maximum 37% rate, for cars emitting 90g/km or more. (This is expected to raise an additional £30m in the 2020/21 and 2021/22 financial years, according to the Autumn Statement’s supporting documents).