The benefit in kind value on a £20,000 electric car in 2020/21 will only be £400, costing a higher rate taxpayer £160 in tax – considerably less than the £880 payable in 2018/19. However, fully-electric vehicle sales make up just under three percent of total cars sold so far this year with petrol and diesel still accounting for 90 percent of sales. At the Autumn Budget 2017, it was announced that, from April 2018, there will be no benefit in kind charge on electricity that employers provide to charge employees’ own electric vehicles. Company car drivers choosing a pure electric vehicle (EV) will pay no benefit-in-kind (BIK) tax in 2020/21 following a Government review which looks set to boost sales of emissions-free cars. Having a company car offers better security to the employee as they don’t need to worry about insurance, maintenance, and servicing costs. Full electric cars are exempt from Vehicle Excise Duty (VED), but you still have to pay Benefit-in-Kind (BiK) tax if you’re going to run one as a company car.. This is set to rise for the Tax Years 2019/20 and 2020/21, with the benefit in kind charge rising to £3430, with the new Van Benefit Charge being £686 and £1372 respectively. Changes are being made to significantly reduce the benefit in kind charges on these vehicles. See today's front and back pages, download the newspaper, Car tax updates to benefit-in-kind rates will lead to a “renaissance” of company cars which will help the country’s switch to electric vehicles. Workplace electric vehicle charging - benefit in kind exemption From 6 April 2018, employees charging their own electric vehicle at work are not At Accounts & Legal, we offer highly-qualified tax advice to help small businesses succeed. This is currently set at £3,490 for the 2020-21 financial year. DON'T MISSCar tax 2020: Changes will axe prices for some owners [INSIGHT]Car Tax rules could change in 2020 [ANALYSIS]Car tax changes could see a rise in company cars [COMMENT]. So, if your employer has given you a car, one that you can use for both work and personal use, then in the eyes of HMRC that vehicle is deemed a ‘company car’ and, as such, a ‘taxable perk’. We are full-service accountants offering tax and accounting support from bookkeeping to business plans, and payroll to tax-efficient investment advice. Estimates reveal a new premium Tesla Model 3 could cost just £307 per month if purchased with a 48-month contract. Tax changes which come into effect in 2020/2021 will help to reduce company car tax bills for drivers. However, in August alone, new owners registered 2,082 of the Model 3 cars, according to data from the Society of Motor Manufacturers and Traders. Company car benefit-in-kind tax rates already announced for the three years 2020-2021, 2021-2022 and 2022-2023 were confirmed in the March 2020 Budget. This growth is likely to continue as more people try to move away from fossil fuels, which is being incentivised by the Government. As a milestone decision, this is the first opportunity for company cars to be taxed at 0% as a benefit in kind (BIK), helping businesses make the transition to zero emission vehicles and a potentially emission-free future. If you are thinking of choosing an electric car, or are doing your research to determine if one could work for you, here’s a comprehensive guide to how the tax is calculated for electric company cars. This tax year (from 6 April 2020) we have seen the introduction of tax exemptions on electric and low emission vehicles which is increasing the popularity of electric company cars. He said: "The April 2020 car tax changes have been a welcome relief to company motorists with planned changes of zero percent Benefit in Kind payment for company car drivers with electric vehicles from the 5th of April, with an increase to just 1 percent from April 2021. According to data from HMRC in 2017, the number of employees paying company car tax reached a five-year high. Chancellor Rishi Sunak will scrap the benefit-in-kind charges during his March budget which is expected to dramatically boost the take-up of fully-electric vehicles. HMRC say that the benefit of free fuel is equivalent to your employer giving you £21,100 in cash. This incurs a tax charge of £959 for a basic rate taxpayer per annum or £1,918 if you are a high rate taxpayer, On the other hand, a Range Rover, which has considerable CO2 emissions, has a percentage charge of 37% on a P11D value of £78k. Benefit In Kind: When does a van become a company car? Car tax benefit in kind changes saw extra tax fees scrapped on models purchased under salary sacrifice schemes. Changes in emissions regulations has resulted in the removal of BIK (benefit-in-kind) tax on employees who drive EVs (electric vehicles) as a company car. Growing your business: Putting your tax relief benefits to work. Taxable benefits in kind and expenses payments: company car tax rules - 2013 to 2020 MS Excel Spreadsheet , 18.7KB This file may not be suitable for users of assistive technology. The Tesla Model 3 has become especially popular as it has rapidly become the UK’s third most popular new car. For example: A Toyota Prius currently has a P11D value of £28k and a percentage charge of 17% for the 2019/20 tax year. BIK are extra benefits given to employees as benefits packages that aren’t included in salaries or wages. Summary of Electric Car Tax Benefits. In total, just over 6,500 EV’s have been sold so far this year compared to just 2,065 after February 2019. These examples illustrate the amount of money employees can save annually if their company car is electric. The scrapping of benefit-in-kind rates is part of the government’s approach to meet their 2050 zero-carbon target. If you’re self-employed and thinking of starting a business, we can help plan ahead and get your accounts in order. From 2020, the appropriate percentages for zero emission cars will drop from 16% to 2%, while those for cars with CO2 emissions between 1g/km and 50g/km will vary between 2% and 14% depending on the number of zero-emission miles the vehicle can travel. 1 However, this exemption was not included in the Finance Bill published in December 2017 which is currently passing through Parliament. With electric cars being exempt from this tax for 2020/21, this makes having a company car a much more tax efficient choice for employees than it has previously been. BENEFIT IN KIND (BIK) SAVINGS . So, does it pay to go electric? Switching to electric company cars can bring many benefits, including less BIK tax for your employees. This results in a BIK tax of £5,820 for a basic rate taxpayer per annum or nearly £1,000 per month for a high rate taxpayer. When it comes to company cars, the amount of benefit-in-kind tax you’ll have to … Home of the Daily and Sunday Express. Analysis of the data shows an extra 217.8 percent have been sold over the first two months of 2020 than 2019. If you’d like advice on car allowances or HMRC company car tax, call us on 0207 043 4000 or get an instant accounting quote in just five clicks. The luxurious electric vehicle would usually be around £530 per month in a giant 42 percent saving. From 6 April 2020 until 5 April 2021, full battery electric vehicles (BEVs) will pay no Benefit in Kind rate. BIX tax is calculated by multiplying the P11D value, which is the list price, by the BIK percentage banding, then multiply that figure by the employee’s top rate of tax – 20%, 40%, 45%, or 60%. In his March 2020 Budget, Chancellor of the Exchequer Rishi Sunak confirmed that motorists buying electric cars would continue to benefit from the Plug-In Car Grant (to 2022-2023), but it would reduce from £3,500 to £3,000, and cars costing £50,000 or … HMRC company car tax calculator. …but now pure electric cars pay no company car tax. The Government says that company car drivers choosing a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21. Related: Growing your business: Putting your tax relief benefits to work. Ultra-low emission cars from April 2020 From 6 April 2020, there will be a few changes to P11D forms for Ultra Low Emission Vehicles (ULEVs) such as pure electric and some hybrid cars. “Attitudes toward electric vehicles are changing fast, I'm confident we will see a renaissance of drivers reverting back to company cars to take advantage of the tax breaks, which will undoubtedly help with the overall country's move toward electric mobility.”, READ MORE: This one car tax update is needed in 2020, says experts. For cars registered from 6 April, the government seems to be standing by its pledge to reduce the UK's carbon emissions - hybrids with long electric ranges get very favourable rates and pure electric vehicles (EVs) go to 0% for 2020-21. The removal of the heavy charges will make fully-electric vehicles genuinely affordable to the majority of business owners. newspaper archive. However, there are tax breaks for drivers of company cars with shorter electric ranges, but they aren’t as generous. order back issues and use the historic Daily Express Call us today or get an instant quote for our services! Although benefit-in-kind rates are set to rise next year this will only be one percent in April 2021 and two percent by April 2022. A car allowance can be more affordable for your company and allows a greater degree of flexibility and choice. From 6 April 2020, the benefit in kind rates for all-electric cars is reducing from 16% to 0%, which will potentially result in significant tax and National Insurance contribution (NIC) savings. Note: To qualify with plug-in hybrid cars, the models need to emit less than 50 grams per kilometer of CO2, in addition to being able to travel 130 miles or more as a pure electric car. Introduced in 2002, company-car tax applies to cars bought by employers for their employees' private use. In this option, the employee is taxed on a theoretical value of the benefit, which is a blend of the list price of the vehicle, emissions of the car, and whether the employee pays for private fuel used or not. Recently released draft HMRC guidance sheds more light on the tax treatment when an employee charges their own electric car at work, but the treatment of business mileage payments relating to electric cars continues to leave many in the dark.. Originally graduating with a degree in geography from Edinburgh University, Keir claims that he was then tricked into becoming an accountant by one of the UK's top 5 accountancy practices.The deception extended to the usual training in audit and associated activities. Figure 1: Proportions of taxable value from different benefits in kind Car benefit and car fuel benefit together represented over 60% of the total taxable value of all benefits in kind… The reductions are set to revitalise the customer car market with salary sacrifice schemes set to return to favour among business people keen to grab a discount. If you want to know if an electric or hybrid car is eligible for the Plug-in Car Grant, you can check here and if you're interested you should move quickly, as the government's £5,000 subsidy on new electric cars runs out after the first 50,000 have been sold. Here’s everything UK businesses and the million or so company car users need to know about HMRC company car tax. Related: Should you offer your employees a company car? It’s the most affordable electric car from Tesla, costing between £36,490 and £50,000. Electric company cars will be exempt from tax In 2020/21. Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. However, this option tends to put an additional burden on the employee as they have to maintain the car and track business mileage. The 2020/21 tax year is the perfect time to register an electric company car. It means motorists will be able to enjoy discounted costs on electric vehicles for the next couple of years at least if customers do not wish to commit to a new vehicle straight away. Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. There will be a … Deliveries of the car only started in late June 2019 across the UK. Proposed car tax updates could see insurance prices rise, Campaigners push for changes to 'regrssive' car tax, Car tax changes could boost electric car sales, Benefit in kind rates will be scrapped from April, Car tax 2020 changes described as a 'game-changer', Car tax 2020: This is what your road tax pay for, 250,000 company cars could be evading car tax charges, The changes could prompt business people to buy electric cars, This one car tax update is needed in 2020, says experts, Car tax 2020: Changes will axe prices for some owners, Car tax changes could see a rise in company cars, DVLA officials will hunt down car tax evaders on these 20 UK regions, AA president calls car tax evasion rates 'staggering', Car tax changes could see rise in electric cars. It will apply to company cars registered: before or after 6 April 2020, powered wholly by … The latter measure even extends to electric cars registered before 6 April. 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