With the BiK tax typically having a significant hit on the monthly wages owed to employees who use and own company cars, the new offering from the government for those who take on electric vehicles is extremely compelling.
In short, the HM Treasury and government announced in April 2020 that the BiK tax due on battery electric vehicles would now drop to 0% for the year 2020-2021, rising to 1% for 2021-20222, and 2% for 2022-2023.
After the three-year rise, rates will then be frozen at 2% for a further two years, lasting until at least 2025.
Prior to these changes, the BiK tax due for EV company cars sat at 16%.
The new rates have been split into two segments – one for owners of company cars registered prior to 6th April 2020, and one for owners with vehicles registered after 6th April 2020. Though these two different rate tables provide significant differences depending on CO2 emission levels, for pure electric vehicles the percentages remain the same.
These two tables will run consecutively for the first two years, coming together as one again in the year 2022-2023.
What do these changes mean for EV company cares?
Well firstly, it means that we expect electric vehicles are about to become vastly more popular as a company car option – increasing not only the number of employees choosing electric, but also the number of employees taking on any kind of company car.
Prior to the announcement in April 2020, businesses had seen a slower uptake on company cars due to the uncertainty around the BiK tax commitments for the future. The company car market is crucial to supporting the country’s transition from petrol and diesel fuel to electric vehicle, and so the dip in demand had become worrying for future plans.
By making their announcement with a focus on the 0% tax for EV company cars, the government have not only revived the call for company cars, but they have ensured a commitment to roads in the UK becoming zero emission and CO2 free.
