From April, company car tax will be scrapped for electric car buyers, and experts are predicting increased demand for electric vehicles.
The SMMT (Social Motor Manufacturers and Traders) reported that sales of electric vehicles doubled in the second half of last year following the announcement in July. In addition to which Alphabet the business lease firm reported a 165% rise in orders for plug-in vehicles.
Company cars are taxed on a benefit in kind (BIK) value, which is based on the list price of the car, and the CO2 emission percentage. From April, people who choose electric cars will pay 0% company car tax: nothing at all.
In addition to which, company car tax will for the first time be calculated using the CO2 figures generated by the new, tougher Worldwide Harmonised Light Vehicle Test (WLTP) regime. In effect, the government is offering a huge incentive for drivers choosing electric and plug-in hybrid cars, and making it far less advantageous for staying with conventional diesel or petrol.
Some businesses are revising their electric vehicle policies, and are offering electric cars only to any new employee signing up to their company fleet scheme. Of course, this does rely on delivery times for electric cars improving!
If you would like to discuss this new company car dynamic, please contact our Corporate Tax teams on either 01788 539000 or 0116 261 0061.