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Tax-Free Year for Electric Company Cars in 2020

Nov 2019
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Welcome news for electric company car owners! In July, the government announced that, from April 2020, drivers of emissions-free electric company cars will pay zero benefit-in-kind (BIK) tax for a year (reduced from 2%), followed by 1% from April 2021 and 2% BIK from April 2022.
BIK tax, also known as company car tax, is payable on all company cars, with the rate dependant on vehicle emissions. Plug-in hybrid vehicles which can reach a 130-mile electric range are also included in the tax deduction.

Why have taxes changed?

These changes have been prompted by the EU updating its vehicle emissions testing procedure from the New European Driving Cycle (NEDC), to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP). The NEDC was designed in the 1980s and has quickly become outdated following the release of new technology in the vehicle industry; where the NEDC would use a single test cycle to measure the efficiency of cars, the newly introduced WLTP uses a dynamic cycle which is more representative of real driving, among other new procedures including:

  New European Driving Cycle Standards Worldwide Harmonised Light Vehicle Test Procedure Standards
Average Test Speed 34 km/h 46.5 km/h
Cycle Time 20 minutes 30 minutes
Maximum Speed 120 km/h 131 km/h

The WLTP’s more realistic driving test conditions mean that we can see more accurate measurements of cars CO2 emissions and fuel economy, allowing consumers and businesses to make more educated decisions about which vehicles they choose. These new procedures may also result in an increase of tax payable on some vehicles as a result of higher recorded vehicle emissions, which has nudged the government to reduce electric vehicle company car tax rates to 0% in an attempt to offset the aforementioned increase.

The reduced BIK rate is designed to increase the uptake of fully electric vehicles among fleets, which contribute to almost 60% of new car registrations in the UK.

Why go electric?

As well as 0% BIK tax in 2020, electric vehicles offer a host of other benefits.

Electric and plug-in hybrid vehicles boast lower running costs, saving one third of the cost of buying petrol per km. EVs (electric vehicles) also have cheaper maintenance costs, due to fewer moving parts. The absence of a fossil fuel engine, radiator and expensive exhaust systems mean less servicing is needed. In addition to reduced harmful exhaust emissions, some EVs are constructed using bio-based materials (Ford Focus Electric) and recycled plastic bottles and bags (Nissan Leaf), further reducing your business’s carbon footprint.

How can we help?

If you are considering using electric vehicles for your business, FireCare Security & Electrical can help. We offer advice and installation of electric car charging points through our sister company,  Southern Vehicle Charging. Call us today on 023 8026 9833 to find out the benefits of installing Electric Car Charging Points on your premises for employee use.

At FireCare Security & Electrical we carry out a range of electrical services as well as fire and security solutions for our clients all over the South Coast and London. We’re based in Eastleigh, close to the M3 to provide our client with a first-class, professional service throughout Dorset, Hampshire, West Sussex, Berkshire, Buckinghamshire, Hertfordshire, London, Middlesex, Oxfordshire, Surrey and Wiltshire.

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