Car BIK and VED rates increase for 2020
The government will be changing its Benefit In
Kind (BIK) tax rates for company car drivers from 6th April 2020. The new rates
show a clear bias toward all-electric and efficient hybrid models, especially
What are the changes?
There will be higher tax rates for more polluting vehicles and an attractive 0% BIK tax for those with zero CO2 emissions. In addition, it also splits models in the 1-50g/km CO2 emissions band by electric-only range.
These rates apply to all types of car, although diesels must be RDE2 compliant; those not meeting the RDE2 testing standard will be subject to an additional 4% tax.
Over the next two years, the BIK rate for zero emissions vehicles will increase by 1% each year.
|CO2 (g/km)||Electric range (miles)||2020 to 2021 BIK %|
|1 - 50 ||Over 130||2|
|1 - 50||70 - 129||5|
|1 - 50 ||40 - 69||8|
|1 - 50||30 - 39||12|
|1 - 50 ||Under 30||14|
|51 - 54||15|
|55 - 59||16|
|60 - 64||17|
|65 - 69||18|
|70 - 74||19|
|75 - 79||20|
|80 - 84||21|
|85 - 89||22|
|90 - 94||23|
|95 - 99||24|
|100 - 104||25|
|105 - 109||26|
|110 - 114||27|
|115 - 119||28|
|120 - 124||29|
|125 - 129||30|
|130 - 134||31|
|135 - 139||32|
|140 - 144||33|
|145 - 149||34|
|150 - 154||35|
|155 - 159||36|
|160 and above||37|
What is the impact?
While there has been a downturn in colleagues
opting for company cars over recent years due to the higher BIK rates for
petrol and diesel models, the number of new electric cars available - many with
decent ranges - and their lower tax rates are expected to boost company car
What about VED rates?
VED rates typically increase over time - to keep
up with inflation - but for 2020, they will stay the same as 2019.
But there are rumours of VED increases?
The rates are staying put but there have been
some significant changes in the industry which have had an effect on some
Primarily, increases will be due to the way
emissions are determined for each vehicle. The newer WLTP method
produces more accurate emissions data - with the added benefit of providing
more realistic fuel consumption figures for consumers. In most cases, the new
CO2 figures are higher than under the previous tests and some models will now
fall into higher VED bands.
What changes are on the horizon?
With the government’s plan to stop the sales of
petrol, diesel and hybrid cars by 2035, we can expect further changes to
taxation in the coming years to encourage customers to choose electric
vehicles. The government has already stated that it will consult on “moving
towards a more dynamic approach to VED which recognises smaller changes in CO2
You can find the latest VED rates published by
the government here.
About the Author
Andrew is a freelance motoring journalist with a background in IT and the vehicle leasing industry. With a lifetime’s passion for all things automotive, he can be found behind the wheel of everything from vans to supercars. In addition to reviewing the latest vehicles and technology, Andrew also runs a couple of classic British motors. He lives at the edge of the Peak District with his son and cat.
Andrew Wright @theMotorWriter