New car tax regulations coming into effect this week will make zero-emission and some ultra-low emission company cars far more attractive, according to the Low Carbon Vehicle Partnership (LowCVP).
From 6 April drivers of zero-emissions models will now pay no benefit-in-kind (BIK) tax whatsoever, down from 16% currently. On smaller electric cars such as the Renault Zoe, that equates to a £1,023 BIK tax saving for someone in the 20% tax bracket and £2,046 for a 40% taxpayer. On a Tesla Model 3 Performance the annual savings are £1,806 for a 20% taxpayer, and £3,612 for 40% taxpayer.
Cars with CO2 emissions of 1-50g per km that are registered from 6 April 2020 will now pay between 0% and 12% BIK tax (also down from 16%). This is determined by the vehicle’s CO2 emissions and a new electric-only driving range figure.
Andy Eastlake, managing director of LowCVP, said: “For any company car drivers who have been thinking of switching to a low or zero emissions car, now’s most definitely the time. These tax savings, on top of the already significantly lower running costs, make PHEVs and pure electric vehicles very hard to ignore. Actively encouraging company drivers is one of the fastest ways of transitioning our fleet to the zero-emissions target.”
Tim Anderson, head of transport at Energy Saving Trust, added: “The imminent changes to the benefit in kind company car tax are an important step in supporting the increased uptake of electric vehicles. The important saving brought by the reduction of 16% to zero tax in 2020/21 makes an electric vehicle increasingly attractive for company car drivers.
“Petrol and diesel cars contribute 18% to the UK’s total carbon emissions. Electric vehicles play a central role in the decarbonisation of transport, and the improvement of air quality.”