Good news for electric company car drivers following Government review
Changes to the UK’s company car tax system will mean that business drivers could make considerable financial savings, especially when using electric vehicles.
In July 2019, the Government announced a freeze on company car tax for fleet vehicles and a zero Benefit-in-Kind (BIK) rate for fully electric vehicles as part of its WLTP and Vehicle Taxes review.
Tusker, the car benefit people, have welcomed the changes. The scheme, which enables drivers to exchange some of their salary for a brand new, all-inclusive car, has now become even more affordable. And this change also offers clarity to car drivers and fleet managers.
Paul Gilshan, CEO at Tusker, comments: “The Government have shown real commitment on the road to zero emissions. This announcement will really encourage drivers into the cleanest vehicles, helping to meet carbon reduction targets.”
For most vehicles registered before 6 April 2020, company car tax bands will be frozen at the 2020/21 rates until 2022/23. Those registering new cars after 6 April will see a two percent tax cut with zero emotion models now tax-free in 2020-21, only rising 1 percent each year until 2023. With the Car Benefit Scheme taken from an employee’s salary before tax and National Insurance, this could provide an even bigger saving for thousands of people.
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 charging point infrastructure, means that Electric Vehicles (EVs) are more accessible than ever before.
In real terms, 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. When taken under a salary sacrifice arrangement, they could also benefit from an overall tax efficiency of around £6,000.
The future looks bright for green fleets. Recent research shows that employees are also starting to put more focus on eco-friendliness than model when it comes to company cars. Multiple Green Apple Award winner, Tusker, have a carbon-neutral fleet, with a growing range of electric vehicles on the Car Benefit Scheme, ranging from the Nissan Leaf to the Tesla Model 3, with models to suit everyone.
The business has also recently been awarded ‘Go Ultra Low Company’ status, in recognition of how the organisation has introduced pure electric and plug-in hybrid cars to its fleet and its commitment to increase uptake over the coming years, to embrace a greener motoring future.
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