New BiK rates kick in with 0% for EVs
The long-awaited new company car tax rates have taken effect as of today, bringing certainty for fleet operators and helping to springboard the switch to electric vehicles.
Confirmed in last month’s Budget, the rates were set out in July 2019 as a result of the WLTP consultation and see all zero-emission company cars attract a reduced appropriate percentage of 0% in 2020-21 and 1% in 2021-22, before returning to the planned 2% rate in existing legislation in 2022-23.
From today, newly registered cars are now taxed based on CO2 figures from the WLTP cycle introduced in September 2018. To help mitigate the impact of the more stringent testing cycle, these vehicles get a two percentage point tax cut on the former 2020/21 rates from 1g/km upwards. These figures then increase by one percentage point in both 2021/22 and 2022/23.
For cars registered between 1 October 1999 and 5 April 2020 inclusive, the Government reiterated in the Budget that these will continued to be based on NEDC Correlated figures going forwards.
The introduction of the new BiK rates for electric vehicles has been particularly welcomed within the EV industry and by those campaigning for cleaner vehicles, including the joint government and industry Go Ultra Low scheme.
Head of Go Ultra Low, Poppy Welch said: “The Government’s Benefit-in-Kind tax rates are the latest of a host of incentives on offer for people considering the switch to electric. We expect that this company car benefit will encourage further EV options to be introduced to fleets, as companies work to pass on the tax savings to their employees. It will also add further momentum to the UK’s EV market, which grew an impressive 21% in 2019.”
EV charging specialist Engenie also welcomed the switch to the new scheme.
CEO Ian Johnston commented: “The elimination of Benefit-in-Kind tax for electric vehicles marks a significant milestone in the journey towards mass adoption. It now makes complete financial sense for millions of drivers across the UK to go electric. Not only will this directly increase the numbers of electric vehicles on the road today, it will also give a huge boost to the all-important second-hand electric vehicle market, building momentum for wider electric vehicle adoption in two to three years’ time.”