By James Morris, Editor, WhichEV
In April 2020, the Benefit-in-Kind (BIK) rate for EVs dropped to 0% for the tax year. It rose to 1% for 2021-22, then 2% for three years from 2022 to 2025. Given the previous rate 16%, these are significant changes.
In other words, if you received an electric vehicle as a company car this year, you paid no personal income tax on it until April 2021, and very little until at least 2025, whereas before April 2020 you’d have paid a lot more, making the reduction a significant incentive for employees to have an EV as a company car. In our previous article, we calculated that, if you received a Tesla Model 3 Standard Range Plus instead of a Mercedes C220d saloon as your company car from your employer, you’d save well over £10,000 over three years of use in terms of tax, fuel and other running costs.
But what are the incentives for the employer to buy you an EV? Other than providing an attractive perk for employees, why should your company go electric, when EVs still tend to be considerably more expensive than internal combustion engine cars? In a follow-up to our original article, we will show that buying an EV makes just as much sense for a company as it does for the employee that receives it, and even more so if you run your own Ltd company…