Benefits in Kind (BiK) savings on efficient plug-in hybrid electric vehicles and battery electric vehicles will increase from 6 April 2020 in a bid to improve the uptake of fully electric cars.
The changes affect Ultra-Low Emission Vehicles (ULEV), meaning those with CO2 emissions below 75g/km, with incentives in the tax bands to encourage their choice as a company car.
It is all part of government plans to incentivise ULEV vehicles to counter issues of poor air quality and the effects of global warming, leading up to its plans for all vehicles to be zero emission by 2040.
The Department for Transport (DfT) want to promote zero-emissions vehicles by making them easily identifiable and giving drivers extra benefits, such as cheaper parking and the option to drive in bus lanes. In addition, any company car drivers choosing a pure electric vehicle will pay no BiK tax in 2020/21.
Businesses can adopt ‘plug-in’ vehicles as part of their fleet offering to deliver minimum benefit-in-kind tax bills for drivers.
However, even if at this stage fleet managers are unable to adopt electric vehicles, there are tax benefits associated with petrol and diesel vehicles, such as opting for an RDE2-compliant model or finding alternative ways of travel to mitigate the future company car tax burden.
Company car drivers are becoming more willing to adapt to an electric vehicle world, even though there are concerns over vehicle availability and the practicalities of being able to charge such a vehicle at home. Therefore, fleet decision-makers need to be thinking ahead and factoring electric vehicles into their long-term fleet management plans.