Benefit in Kind Electric Cars: What You Need To Know
The Benefit in Kind Electric Cars tax (BiK) is changing in 2020. If you drive or will be driving an electric vehicle find out how it will effect you.
You could be saving huge amounts of company car costs in 2020/2021 with benefit in kind electric cars having their tax rules reviewed and updated by the Treasury. Dropping from 16% to effectively 0% for electric company cars in 2020, the benefit in kind (BiK) change will be a huge money saver to employers and employees. Prices will rise to 1% in 2021 and 2% in 2022. Given the current BiK prices (especially for more costly electric cars), companies could be saving up to £800 a year when the new changes are introduced in 2020. Why are the Benefit in Kind electric cars tax prices changing? Let's find out below
Worldwide Harmonised Light Vehicle Test Procedure (WLTP)
If you keep up with the news you may have heard about WLTP (if you're interested in reading more about WLTP click here). Defined by EU law as a laboratory test to measure fuel consumption and CO2 emissions from cars as well as any other pollutants they emit. This came into mainstream media news when car manufacturers were heavily criticised for hiding their actual emissions numbers. What does this have to do with BiK?
BiK rates are dependent on CO2 outputs. So when WLTP came into effect cars with high CO2 emissions received a price hike in their BiK tax. This change had a largely negative effect on company car owners who were using more expensive executive cars that were emitting more CO2, causing a price hike.
How does Benefit in Kind effect electric company car users?
Company car users who drive an electric car will be exempt from BiK tax rates as they produce zero emissions. With over 1 million people in the UK using a company car on a daily basis, this will be a huge money saver for them as well as more initiative to hop on the electric car revolution. Not only will you be saving money but the change will be extremely helpful to the environment as thousands of company car owners swap over the electric cars.
What electric cars will be exempt?
Not every electric car will be exempt though. The Treasury has reviewed and set the rules as "Any PHEV (Plug-in Hybrid Electric Vehicle) able to travel 130 miles or more on battery power and emissions below 50g/km will escape the BiK tax rate". Make sure you check out your PHEVs mileage limit and emissions to see if it will be affected by the rules.
An official comment from the Treasury states “recognises the value of the company car market in supporting the transition to zero-emissions technology” and also considers that by encouraging more company car drivers into low-emission cars, it can help generate “a competitive second-hand market in these vehicles.”
The BiK tax exemption applies to electric vehicles and PHEVs from April 6th 2020 and those registered before that date. If you intend to take advantage of the money-saving opportunities as an employer then it's worth looking into an electric car that will be exempt from BiK tax.
As a leasing company, Stable Vehicle Contracts has a number of electric vehicles that can be leased as company cars for businesses. All of the electric cars we lease for company car users will be exempt from BiK tax, so it's worth taking advantage of our deals to save you a large amount of money come April 2020. You could be saving up to £1000 per year!
Check out our current electric vehicles available on lease below. If you're interested in knowing spec and prices just click the image and you will be taken to each cars individual page that contains more information.
If any of the above electric cars takes your interest, why not give u a call and discuss some leasing prices? It's worth taking the plunge before the Benefit in Kind electric cars tax comes into play. You can reach us on 0151 728 4711, alternatively, visit our contact page and submit a form and we’ll aim to respond to you within 24 hours.