Demonstrating the government’s ongoing aim to increase the number of plug-in electric cars on UK roads, they have announced that April will bring the chance for company car users to own a plug-in electric car with 0% company car tax. That’s right, nothing.
Whilst many may believe that company cars are already free, users actually currently pay for their company car as a heavily taxed perk. The tax, known as benefit-in-kind (BIK), is worked out as a percentage of their car’s list price, the car’s official CO2 emission figure and the individual’s salary tax band (those that earn more, pay more BIK).
The April change will mean that employees opting to drive an all-electric company car will have to pay zero BIK for the 2020 tax year; with low rates being introduced in 2021.
At the same time as the April 2020 change coming into effect, the way that company car tax is calculated will be changed, instead using the CO2 features calculated through the stricter Worldwide Harmonised Light Vehicle Test (WLTP).
The switch to using WLTP will almost certainly see the cost of using a petrol or diesel company car continue to rise, ultimately making the proposition of an electric car with 0% company car tax even more appealing.
The scheme comes as part of the government’s goal to improve air quality in the UK and to increase the speed at which people are adopting electric cars. It seems to be working, too; after the government announced the upcoming change in July 2019, Alphabet – a business lease firm – reported a 165% rise in plug-in vehicle orders.
That rise in electric car orders was also felt by the Society of Motor Manufacturers and Traders (SSMT) who reported EV sales had doubled in the second half of 2019 when compared to the first half.
April’s company car tax change is set to take effect just months after the government’s recent announcement that they are bringing their 2040 plan of banning the sale of new petrol and diesel cars forward to 2035 at the latest. Read more about that here.
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