The number of orders for pure electric cars has increased since the new benefit-in-kind (BIK) tax rates were announced.
The Government announced that company car drivers, driving a pure electric vehicle, will pay no company car tax in 2020-2021.
UK leasing firms have reported a surge in orders of electric cars since the BIK announcement back in July 2019.
The key decisions were:
- for cars first registered from April 6, 2020, most company car tax BIK percentage rates will be reduced by 2 percentage points in 2020-21 before returning to planned rates over the following two years – increasing by 1% in 2021-22 and 1% in 2022-23
- to accelerate the shift to zero emission cars, all zero emission models will pay no company car tax in 2020-21, 1% in 2021-22 before returning to the planned 2% rate in 2022-23
- on Vehicle Excise Duty, a call for evidence will be published later this year seeking views on moving towards a more dynamic system which recognises smaller differences in carbon dioxide (CO2) emissions
In addition to the reduction in BIK rates, companies purchasing new electric vehicles can also write off the full cost of the vehicle against taxable profits. This could lead to a reduction in corporation tax of 19% of the purchase price of the vehicle.
“It’s no surprise that the number of orders for electric vehicles has soared, this is a real saving for company car drivers,” said John Moorhouse, accounts senior at Ellis & Co.
For further information about this or any other matter contact Ellis & Co on 01244 343504.