New car tax increases are ‘negligible’ as electric cars will still be cheaper than petrol

New car tax increases are ‘negligible’ as electric cars will still be cheaper than petrol


Martin Lewis gives money-saving advice on VED car tax

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Electric car benefit in kind tax rates are set to increase from early next year within drivers set to pay two percent on company car purchases. The rates currently stand at one percent but will increase in line with previous Government announcements.

The benefit-in-kind rate did stand at zero last year after the rates were dramatically cut from 16 percent.

The changes mean it will be slightly more expensive for drivers to get an electric vehicle through a company salary sacrifice scheme.

However, Fiona Howarth, spokesperson for Octopus Electric Vehicles said the added increase should not put off prospective owners.

She warned the extra rate would still be nothing compared to the possible savings drivers could make under the Octopus scheme.

Speaking to, she said: “Absolutely the two percent is negligible compared to the savings they can make on income tax and National Insurance.

“You can see here in the numbers, benefit in kind for the ID.3 right now is £5 per month compared to the savings they are making which is £105 per month.

“Even when it goes up to two percent it’s actually just £10 per month benefit in kind rate.

“There is still a saving of over £90 per month even when it goes to two percent.”

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However, research from PodPoint suggests the increase may have a more expensive impact on some drivers.

They suggest drivers paying the most expensive 45 percent income tax would pay around £311.17 per month in benefit in kind charges on a new Nissan LEAF.

However, this will rise to £22.34 when the rates increase to two percent from next year.

Despite this, data from Octopus Electric Vehicles shows it is even cheaper to get an electric car than a petrol and diesel model.

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