Car tax 2020: How employers could help you save 40 percent on a new car with tax changes02/07/2020
Car tax rules for company vehicles are set to change this year which will see a complete ban on benefit-in-kind rates as rates are dramatically cut. The updates will slash benefit-in-kind rates to zero percent from 16 in a massive win for those wishing to get involved with the electric car revolution ahead of 2035’s petrol and diesel ban.
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Changes to the rates will see some of the most popular EV’s on the market go for budget prices as the government aims to increase the uptake of the machines.
A premium Tesla Model 3 is estimated to cost around £530 under a 48-month contract. However, company car owners could see a 42 percent discount by paying just £307 per month.
Discounts would also come into force across the affordable market with Renault’s Zoe around 32 percent cheaper.
The city runaround is estimated to cost around £270 per month through a finance deal but a slash in benefit-in-kind rates for company car owners could see motorists paying just £184 per month.
READ: Car tax changes could see a rise in company cars
A Volvo spokesperson said an XC40 hybrid machine could cost just £160 under the new legislation.
He said a lot of similar vehicles were around £400 which means motors can make massive savings with the scheme.
The rates are expected to increase over the next two years but will still signal a major reduction compared to current levels.
Tax rates will stand at just one percent in 2021/22 and two percent by 2022/23 for all-electric vehicles.
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Experts have tipped the demand for company cars to dramatically soar in the wake of the changes when they come into effect in April.
Fiona Howarth, CEO of Octopus Electric Vehicles has claimed she has seen extensive interest form businesses about setting up schemes for their workers.
Electric car experts add switching to an electric vehicle could see motorists make incredible savings on running costs.
Fuel savings, extra tax breaks and no city emissions zone fees are all extra benefits owners can enjoy.
Those that purchase an electric car now will also be entitled to the government’s £3,500 grant for an instant discount on upfront costs.
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Speaking to Express.co.uk, Dan Martin, CEO of Elmtronics said: “In terms of other benefits from owning an electric car, company car owners will no longer pay benefit-in-kind (BIK) on fully electric vehicles.
“This figure compares to the 37 percent rate charged on high emission vehicles meaning monthly repayments for EV cars will be slashed.
“If you add in fuel savings over the space of the year and emission zone exemptions, the case for going electric is compelling.”
Employers can get discounted rates through their salary sacrifice schemes where employees sacrifice a portion of their monthly salary for perks such as childcare vouchers and pension schemes.
Many businesses have reported a drop in company car take-up as motorists instead opt to take the cash alternative,
However, with the new rates making company cars affordable for many road users the scheme could be set for a comeback in popularity.
Some scheme will even allow motorises to bundle together several elements such as their car insurance, road tax and car services into one agreement.
It means for one monthly chunk from their wage packet motorists will have everything they need to get out on the road with little added concerns.
Some experts have said benefit-in-kind rates help to bring electric vehicles in line with their traditional vehicles which are a lot cheaper than the new technology.
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