Nearly one million company car drivers are set to benefit from the Government’s decision to freeze company car taxation.

The announcement came in the Government’s response to the recent Review ofWLTP & Vehicle Taxes.

Those with vehicles registered before 6 April 2020 will see their company car tax bands being frozen at the 2020/21 rates until 2022/23. Those registering new cars after 6 April 2020 will also be rewarded with a two-percentage point tax cut. Zero-emission company cars will pay no tax.

After the two-percentage point decrease in 2020/21, company car tax rates will then increase by one percentage point in 2021/22 and 2022/23.

The Government has also confirmed that it will aim to announce appropriate percentages at least two years ahead of implementation to provide certainty for employers and employees.

As well as providing a welcome boost to company car drivers, Treasury has also acknowledged the value of the company car market in supporting the transition to zero emission technology.

“The Treasury is giving back some of the unfair Company Car Tax windfall it was set to receive as a result of WLTP and providing some essential extra visibility on future tax costs for those looking to order their next vehicle,” BVRLA Director of Policy & Membership Jay Parmar said. “This is a good day for company car drivers.”

The changes do not affect the Lease Rental Restriction, Capital Allowances or any other CO₂ related taxes and incentives, but will include fuel benefit charge.