In an effort to increase electric vehicle (EV) uptake among company car drivers, the Treasury recently confirmed that from April 2020 drivers of emissions free vehicles would pay no benefit-in-kind (BIK) tax. The announced change comes following the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) regulations for emissions. As the WLTP gives a more realistic measure of vehicle emissions compared to previous testing standards, reported CO2 outputs are expected to rise. The reported CO2 emissions of a vehicle determine the BIK rate that will be used to determine the amount of company car tax payable by the driver. To calculate the amount of company car tax owed the value of the vehicle is multiplied by the BIK rate and income tax rate; ultimately meaning that the higher the reported emissions of the car, the more expensive it will be for the driver.
The 0% BIK rate will be available on EVs that emit less than 50g/km of CO2 and are able to travel for a minimum of 130 miles on electric power alone. While purely electric vehicles easily meet this standard, as the produce zero emissions on the road, a plug-in hybrid (PHEV) could also theoretically achieve the emissions benchmark and pay no BIK tax. However, currently no PHEV available in the UK meets the standard so this would only apply to vehicles that have not yet been released.
Hybrid vehicles with a purely electric range of less than 30 miles – which are currently available in the UK – will qualify for a reduced BIK rate vs a conventionally powered car. A PHEV would be subject to a BIK rate of 12% from April 2020 (for context a petrol powered car producing 115g/km CO2 would be subject to 31% BIK). The BIK of a zero emissions vehicle will be 0% from April 2020, and then increase to 1% in April 2021 and 2% in April 2022: rates beyond this have not been announced.
The company car and fleet sector represents a large proportion of the new vehicle market in the UK, as almost 60% of new vehicle registrations are attributed to company fleets; so increasing the number of EVs being driven by the over 1-million strong company car drivers could go a long away in reducing the nation’s CO2 emissions.
Whether you are a company car driver or private owner considering going green for your next vehicle, there are a wide range of EVs and PHEVs from Pentagon dealerships with various body-shapes and styles to suit what you are looking for. Classic hatchback city cars like the Renault Zoe and Nissan Leaf are currently available at Pentagon dealerships and emit zero emissions on the road. For those looking for something bigger there is also the Kia e-Niro or the UKs top selling PHEV, the Mitsubishi Outlander PHEV.
As manufacturers put more focus on their EV ranges, the variety of fully-electric and hybrid cars available at Pentagon is only set to grow. The Vauxhall Corsa-e and Peugeot e-208 will introduce an all-electric powertrain to the ever-popular Corsa and 208 ranges, while Ford are set to reveal an as-yet-unnamed all-electric SUV inspired by their iconic Mustang.
If you would like to discuss whether an EV is right for your next car or company car, visit your nearest Pentagon or call us on 0333 222 0424. Our specialists will be able to discuss your individual circumstances and advise on the right move for you.