Company car tax bands

Company car tax rates change from 6 April 2020. Read our guide to find out how much you'll pay...

Executive cars

Running a low or zero-emissions car will be significantly more desirable for company car drivers for the next three years at least, due to changes in the benefit-in-kind (BIK) tax system. Conversely, higher-emissions cars are likely to become costlier to run. 

From 6 April, for the 2020-2021 financial year, new tax bands for company cars are being introduced that heavily favour those which models that emit little to no CO2. And from the same date, BIK rates will be based on the new, higher CO2 figures returned in the latest WLTP test procedure, rather than the less realistic NEDC figures that have been used until now.

The BIK rate for new cars that don’t produce any CO2 – in other words, all fully electric cars – will drop drastically from the current 16% to zero. On an electric Renault Zoe small hatchback, that equates to a £1023 saving in BIK tax for someone in the 20% tax bracket and £2046 for a 40% taxpayer.

The 2020-2021 rates for new plug-in hybrids with emissions ranging from 1-50g/km will come down to 3-12% from the current 16%, depending on each car's CO2 output and electric-only driving range. For example, a BMW 330e with a CO2 output of 32g/km (WLTP) and a 35-mile electric range will qualify for a rate of 10%, equating to a saving of £479 if you’re in the 20% tax bracket, or £958 for a 40% taxpayer. 

In theory, plug-in hybrids can qualify for the 0% rate too, if they have an electric-only range of more than 130 miles. However, none is close to achieving that yet.

Nissan Leaf charging

The 0% rate for 2020-2021 will also apply to zero-emissions cars registered before 6 April. It will rise at the same rate as for new cars in the following two years. Cars in the 1-50g/km emissions bracket registered before 6 April will also enjoy a reduction in BIK tax, dropping from 16% to between 2% and 14%, again depending on pure electric driving range. 

For the 2021-2022 financial year, the rate for zero-emissions cars will rise to 1%, then to 2% the following year. The rates for cars with emissions of 1-50g/km will remain the same for the next three years. 

The 4% surcharge on diesels – introduced in 2018 amid growing concern over the particulates and NOx that they emit – still applies for the coming year. The supplement is for diesels that don’t meet the latest Real Driving Emissions (RDE2) standards, although diesel plug-in hybrids are exempt, because they’re classed as alternative-fuel vehicles. 

Get a discount on your next new car with What Car?'s New Car Buyer service 

Although the new tax bands for higher-emissions cars are between 1% and 6% lower than current levels (apart from the highest polluters in the top 37% bracket), any reductions will be more than offset in many cases by the fact that the rates after 6 April will be based on the higher CO2 figures produced in the latest WLTP test procedure, which has provided more realistic fuel economy figures since it was introduced in September 2018. 

As a result, the official CO2 figures for more than half of all new cars are expected to rise by 10% to 20%, even though the cars’ emissions won’t actually be any different from their current levels. The knock-on effect of this is that they will move up a number of tax bands – one or two in the case of some hybrids but several in many other cases – compared with current levels, so the rates will go up.

For example, the Skoda Superb 2.0 TDI, which emitted 103g/km under the old test procedure, will have a CO2 figure of 135g/km from 6 April. This means its BIK rate will rise from 28% to 34% (including the surcharge), so it will cost a lower-rate taxpayer £345 per year more. 


Company car tax bands from 6 April 2020 

Cars registered before 6 April 2020

CO2 emissions g/km... Electric range... 2020-21...  2021-22...   2022-23...
0 n/a 0 1 2
1-50 >130 miles 2 2 2
1-50 70-129 miles 5 5 5
1-50 40-69 miles 8 8 8
1-50 30-39 miles 12 12 12
1-50 <30 miles 14 14 14
51-54   15 15 15
55-59   16 16 16
60-64   17 17 17
65-69   18 18 18
70-74   19 19 19
75-79   20 20 20
80-84   21 21 21
85-89   22 22 22
90-94   23 23 23
95-99   24 24 24
100-104   25 25 25
105-109   26 26 26
110-114   27 27 27
115-119   28 28 28
120-124   29 29 29
125-129   30 30 30
130-134   31 31 31
135-139   32 32 32
140-144   33 33 33
145-149   34 34 34
150-154   35 35 35
155-159   36 36 36
160 or more   37 37 37

Cars registered from 6 April 2020

CO2 emissions g/km... Electric range...  2020-21... 2021-22... 2022-23...
0 n/a 0 1 2
1-50 >130 miles 0 1 2
1-50 70-129 miles 3 4 5
1-50 40-69 miles 6 7 8
1-50 30-39 miles 10 11 12
1-50 <30 miles 12 13 14
51-54   13 14 15
55-59   14 15 16
60-64   15 16 17
65-69   16 17 18
70-74   17 18 19
75-79   18 18 20
80-84   19 20 21
85-89   20 21 22
90-94   21 22 23
95-99   22 23 24
100-104   23 24 25
105-109   24 25 26
110-114   25 26 27
115-119   26 27 28
120-124   27 28 29
125-129   28 29 30
130-134   29 30 31
135-139   30 31 32
140-144   31 32 33
145-149   32 33 34
150-154   33 34 35
155-159   34 35 36
160-164   35 36 37
165-169   36 37 37
170 or more   37 37 37

The big winners 

We’ve looked at how much company car drivers will save on these award-winning zero or low-emissions cars, assuming they’ll be first registered after 6 April. Prices are for a 20% taxpayer 

BMW 3 Series 330e driving

BMW 330e M Sport 

CO2 32g/km (WLTP) Electric driving range 35 miles 

P11D price £39,925

BIK tax 2019-2020 

Rate 16% Cost £1278

BIK tax 2020-2021 

Rate 10% Cost £799

Saving £479

Get a discount on a BMW 330e with What Car?'s New Car Buying service 


Tesla Model 3 front three quarters

Tesla Model 3 Performance

CO2 0g/km Electric driving range 329 miles 

P11D price £56,435

BIK tax 2019-2020 

Rate 16% Cost £1806

BIK tax 2020-2021 

Rate 0% Cost £0

Saving £1806

Get a discount on a Tesla Model 3 with What Car?'s New Car Buying service 


renault-zoe-2020-review

Renault Zoe R135 GT-Line 

CO2 0g/km Electric 

driving range 238 miles 

P11D price £31,965

BIK tax 2019-2020 

Rate 16% Cost £1023

BIK tax 2020-2021 

Rate 0% Cost £0

Saving £1023

Get a discount on a Renault Zoe with What Car?'s New Car Buying service 


Volvo XC90 2020 front

Volvo XC90 T8 Inscription

CO2 52g/km (WLTP) 

Electric driving range 28 miles 

P11D price £66,975

BIK tax 2019-2020 

Rate 19% Cost £2545

BIK tax 2020-2021 

Rate 13% Cost £1741

Saving £804

Get a discount on a Volvo XC90 with What Car?'s New Car Buying service 


Company car tax bands 2019-2020

  • 0-50g/km – 16%
  • 51-75g/km – 19% 
  • 76-94g/km – 22% 
  • 95-99g/km – 23% 
  • 100-104g/km – 24% 
  • 105-109g/km – 25% 
  • 110-114g/km – 26% 
  • 115-119g/km – 27% 
  • 120-124g/km – 28% 
  • 125-129g/km – 29% 
  • 130-134g/km – 30% 
  • 135-139g/km – 31% 
  • 140-144g/km – 32% 
  • 145-149g/km – 33% 
  • 150-154g/km – 34% 
  • 155-159g/km – 35% 
  • 160-164g/km – 36% 
  • 165 or more – 37% 

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