Cars with CO2 emissions of less than 50g/km are also eligible for 100% first year capital allowances. Electric cars are becoming increasingly popular in the UK. Electric vehicles can also help your organisation meet climate change targets by lowering CO2 emissions and contributing to an increase in air quality. New company car tax rates that are coming into effect from April 2020 will result in the rate of company car tax available on fully Electric Vehicles (EVs) reducing from 16 per cent to zero per cent. More than half of all cars are registered to businesses on UK roads and as companies begin to wake up to the cost savings they can bring, UK fleet managers are starting to think about the switch to electric . The BiK rate will rise to 1 percent in 2021/22 and to 2 percent in 2022/23, being held at 2% for 2024/24 & 2024/25. For cars registered between March 2001 and March 2017, hybrids enjoy even greater VED benefits thanks to car tax being calculated entirely on CO2 emissions. For employers looking into electric company cars, there are now considerable savings to be made. From April 2020 the benefit in kind tax rate is dropping to 0% for fully electric cars. The Government has cut the plug-in car grant and abolished Premium Road Tax for electric vehicles, as part of the Budget 2020. The government’s plug-in car grant is designed to promote the uptake of electric vehicles in the UK. Registered office is: 457 Southchurch Road, Southend-on-Sea, Essex, SS1 2PH, © 2018 TBL Accountants Ltd. All rights reserved. Electric and hybrid vehicles. Over the coming years, those savings will get far more significant too. 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. If more rules get written (or rewritten) for electric cars, it will bring forward the day they find a way to add fuel tax and full rate VAT to the electricity that is used. Capital allowances on electric cars. Exemption from London congestion charge Fully-electric vehicles benefit from a 100% discount from the London congestion charge, representing a saving of £11.50 per day for contractors that travel into central London on a regular basis. Due to their lower emissions, hybrid and electric company cars are taxed at a reduced Benefit In Kind rate (Bik rate) - a move designed to encourage drivers to choose cars that produce lower levels of CO2 and NOx. This relief will expire on 31 March 2019 for corporation tax, and 5 April 2019 for income tax. For example, in the current tax year, 2018-19, electric or hybrid company cars that emit 50g/km of CO2 attract a BIK scale charge of 13% of the vehicle’s P11D value. When the lowest BiK bracket falls to just 3% in 2021, a highly efficient £35,000 vehicle would be setting you back just £210 in tax. There has never been a better time to introduce electric vehicles into your business. This relief will expire on 31 March 2019 for corporation tax, and 5 April 2019 for income tax. As with the Benefit in Kind tax, employers’ Class 1A National Insurance contributions are linked to a car’s CO2 emissions and P11D (purchase cost) value. Diesel cars will continue to be subject to the 4% premium on the above rates, but those meeting the latest RDE2 rules on nitrogen oxide emissions will be exempt from this.. From an individual taxation liability perspective, someone that choices an electric vehicle over a combustion-engine equivalent will be subject to much less tax than they would otherwise. Sales of plug-in hybrid cars have risen by 984% from March 2014 to March 2015, and sales of electric vehicles in 2015 are predicted to reach 30,000. Whether you’re looking to electrify your employee company car scheme or fully charge your business fleet, it certainly pays to go electric. Indeed, it’s usually more cost-effective to buy the car personally and claim your mileage from the business instead. Thanks to recent significant developments of the ultra-low emission vehicles market and its accompanying incentives, including company car tax relief and capital allowances on electric cars, the tax benefits are only growing. Benefits in Kind are the benefits that employees or company directors receive from the company they work for, which aren’t included in their salary or wages. Most of us have heard of the Government-led Cycle to Work scheme, but there’s also a salary sacrifice scheme in place for green motorists, known as ‘Optional Remuneration Arrangements’. From April 2021, the emissions thresholds are expected to fall to 0g/km (for the 100% allowance) and to 50g/km (18% pool). Business tax* : For fully electric vehicles you can usually use the full cost of the electric car to reduce your business tax. Rebecca Cave explains the tax treatment of low emission vehicles. Government has published updated Company Car Tax bands up to 2023, with Electric Vehicles exempt from tax in 2020. TBL Accountants is the trading name of DCP Accountants LLP. We explain what all the buzz is about, by breaking down the benefits of ultra-low emission vehicles for business. 28 February 2020. In this article, we’re going to be discussing HM Treasury’s decision to h… Other benefits: The UK Government has recently defined vehicles which have CO2 emissions below 75g/km as Ultra Low Emission Vehicles (ULEV). Government has published updated Company Car Tax bands up to 2023, with Electric Vehicles exempt from tax in 2020. Government grants are available towards the cost of a new electric/plug-in car (or van), as long as it meets certain conditions. To find out more about the first year allowance and how to claim it, just give our company car tax experts a call on 0121 667 3882 or email us on info@informaccounting.co.uk Some BIKs are taxed and some are not; there are complex rules around each type of benefit and circumstantial considerations that HMRC take into account before deciding whether a BIK is taxable. Electric car benefit-in-kind (BIK) tax treatment is significantly more beneficial than that for conventional engined cars, especially diesels. The tax break that could save you 40% on an electric car: SIMON LAMBERT on how your employer could help you drive for less. The second is the vehicle, s BiK rate -  a percentage figure based on the car, s fuel type and emissions level. Of course, in reality, hybrid and electric vehicles are somewhat more expensive to buy - but even a £35,000 EV would cost you less in tax than the £20,000 petrol vehicle in our example (£910 v £1000). Electric company car tax. On top of this, those with new ultra-low emission vehicles (less than 50g/km CO2) are eligible for a £500 grant towards the cost of installing a home charging unit, meaning you can power up at work and at home. On a car costing around £40,000 this could amount to a tax relief of £7,600 in the first year. There has never been a better time to introduce electric vehicles into your business. Second hand and electric cars with emissions below 110g/km can claim 18%. If your company car has CO2 emissions of 1 to 50g/km, the value of the car is based on its zero emission mileage figure, or ‘electric range’. Employees can drive an electric car in exchange for a portion of their gross salary — that is, before Income Tax and National Insurance have been taken off — resulting in a significant net saving of up to £300 per month. Air quality this is compared to a tax relief could amount to a of... 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