Tax-Free Company Cars

It’s not often that we hear the words ‘tax-free’, but you heard it right, electric vehicles will be exempt from company car tax in the 2020/2021 tax year. Will going electric benefit your business? If you are unsure, here is everything that you need to know.

Let’s Look At The Benefits

Regardless of the registration date, pure electric cars will be taxed by the following BIK (benefit in kind) percentages: 0% during 2020/2021, 1% during 2021/2022, and 2% during 2022/2023. If you are using a hybrid car, it needs to emit less than 50 grams per kilometre of CO2, and it also needs to travel at least 130 miles or more, just as an electric car would.

To put this into perspective, if you were to have a 2-litre diesel BMW, you would be subject to around 31% BIK from April next year…big difference isn’t it?

Electric Car Sales Are Soaring

In the past year, electric car sales in the UK have doubled. This is also likely to continue, with more people trying to avoid the use of fossil fuels, as well as this being incentivised by the government. Tesla is becoming an increasingly popular choice in the UK, and it’s no surprise when it comes with a reasonable price tag of around £45,000.

An Opportunity For Small Businesses

Switching to electric cars will bring many benefits, including less BIK tax for your employees. If your employees are in the higher tax bracket, they will significantly benefit from switching to electric cars; as will you when notice your fuel bill drastically drop.

It’s Not Just Electric

Hybrid cars will also be exempt, as long as the plug-in hybrids emit less than 50 grams per kilometre of CO2, and they can also travel 130 miles.

You and Your Business

A lot of the things that we read these days are about being eco-friendly, saving the planet, and using less energy. If you can promote that your business is actively supporting the change, you are likely to get extra support from eco-friendly customers.

If all of this tax-talk seems too daunting, then get yourself an accountant to do it all for you. We are here to help you, and to give you the time to spend on your business rather than worrying about facts and figures. Get in touch today if you would like some assistance with your business taxes.