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Electric cars become more affordable following changes to Benefit In Kind (BIK) rates - by Tusker

Published on 23/08/2019



Tusker and iCom - Staff Benefits (319) suppliers - discuss electric cars becoming more affordable following changes to Benefit In Kind (BIK) rates.

The Government’s recent Response to the Review of the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) and Vehicle Taxes has resulted in a revision of the Benefit in Kind rates for company cars from April 2020. This affects all company car drivers, but is particularly good news for those opting for an electric or hybrid vehicle.
 
Since 2002, HMRC has been taxing company cars on their CO2 emissions with the aim of rewarding those who adopted lower emission cars. The incentives to drive the uptake of Ultra-Low Emission Vehicles had the lowest tax rates at just 2% for the most carbon efficient cars which can travel more than 130 miles via electricity.
 
For most vehicles registered after April 6th 2020, tax rates have been reduced by 2%, with zero-emission models now tax-free in 2020-21, only rising 1% each year until 2023.

The new BIK rates, coupled with the news that the Department for Transport has committed to spending £37 million on improving the UK’s electric vehicle charge point infrastructure, means that Electric Vehicles (EVs) are more accessible than ever before.

In real terms for 2020-21, an individual earning £30,000 a year already driving a petrol VW Golf (1.5L) company car in 2020-2021 would incur £116 per month in BIK tax. In the same tax year, the tax for an all-electric Golf drops to £0.
Over the course of a three-year period, someone on an annual salary of £30,000 could save almost £4,000 in BIK by driving a zero-emission vehicle. That’s without factoring in the average driver’s fuel saving of a massive £750 per year*.

ULEVs are becoming more popular and as a result, manufacturers are responding with improvements to the cars available. They’re quicker to charge, go further (the average electric vehicle can go 150 miles on a single charge) and are challenging conventional models.
There are more cars to choose from than ever before too, each featuring the very latest in car technology - from electric only models like the Tesla Model 3 or e-golf, to Plug-in Hybrids like the Kia Niro PHEV or Mitsubishi Outlander PHEV for those who still need a conventional engine, there is a tax-efficient car to suit almost everyone.

If you would like to find out more about Tusker or our Staff Benefits framework (319) please click here.
 
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*approximately. Based on driving 10,000 miles per year.
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