How new legislation will affect the company car in 2020

With Benefit in Kind (BiK) changes on the horizon and the Ultra-Low Emission Zone (ULEZ) set to expand further across London, you’ll need to be up to speed with all the new fleet legislation.

ULEZ and CAZ

In April 2019, Central London became the world’s first Ultra-Low Emission Zone (ULEZ). Failure to meet Euro 4 and Euro 6 emissions standards now incur an additional charge and expect ULEZ to roll out further fines to achieve zero-emission targets.

London, Nottingham, Leeds, Derby, Southampton and Birmingham were due to introduce Clean Air Zones by the end of 2019 with another 23 towns and cities following suit in 2020. Forming part of the Road to Zero strategy, CAZs could involve stinging ULEZ style charges. They should prompt fleet managers to continue the migration to vehicles that meet Euro 6 emissions standards.

Be aware that from April 2020, the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) figures for C02 emissions will replace the New European Driving Cycle (NEDC) numbers when calculating VED and CCT.

Bik Changes

The new Benefit in Kind changes will be operational until 2023. The changes to BiK tax bands intend to heavily incentivise the switch to fully electric-powered vehicles which will pay no company car tax in 2020/2021.

Fleet managers should start designing their driver policies around the new changes, with charging infrastructure and eligibility criteria in mind.

It’s vital that your fleet supports your business operations with the right blend of cost, efficiency and minimising environmental impact. Fleet managers should be able to quickly assess whether an ICE or electric equivalent will be more cost-effective, so understanding daily travel needs will be critical.

In order to respond to BiK changes effectively, your fleet management policy will require the agility to mix different fuels and drivetrains and a range of financing options designed to support your fleet through the challenges of the transition period. One of these will be to optimise your charging infrastructure to meet the needs of your growing fleet of EVs. For the time being, electricity used to charge vehicles at the workplace is currently exempt and rated at 0%.

Tax changes

Expect the planned changes in company car tax from 2020 to have a long-term effect on your fleet. The new BiK tax rates will apply until 2023. With ultra-low emission vehicles emitting 75g/km of CO2 or less made exempt from the Optional Remuneration Arrangement (OpRA) which treats company cars taken through salary sacrifice or when a cash alternative is available as taxable income.

With other elements that may come packaged with a vehicle including breakdown cover, insurance and maintenance also treated as income to be taxed; fleet managers will need to be on the lookout for similar tax changes over the next five years.

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