Car tax benefit in kind (BiK) rates for electric models were dropped from 16 percent to zero in April this year to encourage more drivers to switch to eco-friendly vehicles. The updates ensured thousands of electric car owners paid no BiK tax to use an electric model if they secured the car through a salary sacrifice scheme.
However, the charges will increase to one percent for zero-emission models from 2021 which could see some road users fork out hundreds of extra pounds.
The new one percent charge will be based on income levels and the overall value of the electric car.
This means more expensive vehicles will come with higher costs and could see some drivers pay almost £400 per year.
They say Tesla Model S Performance owners who pay 40 percent income tax could see their BiK shares soar to £32.26 per month.
This would increase to £119.16 per year for those who pay 40 percent income tax and £134.06 per year for those on 45 percent income tax.
Charges will rise a further one percent in 2022 before costs will then be frozen for an additional two years.
However, the BiK charges are still cheaper than usual leasing rates with some drivers saving between 30 and 40 percent.
Electric car specialists at Octopus Electric Vehicles have revealed EV leasing has surged under the new proposals as motorists desperately switch to electric models.
“Changes to Benefit in Kind tax have been a financial game-changer for EV leasing.
“Add this to brilliant electric cars hitting the market and huge savings on running costs versus petrol cars, and EV’s are a total no brainer.
“It’s no wonder then that we are seeing a huge boom, with the number of companies ordering EVs via our salary sacrifice scheme growing five-fold since April.”
Published at Sun, 29 Nov 2020 17:47:00 +0000