Greener Future: Company EV Tax Exempt In 2020/21
As we enter a new decade, it is becoming more and more evident that we are in an environmental crisis. This justifies the sales of electric vehicles which rose by 144% in 2019, followed by a major decline in the popularity of diesel-fueled cars. This has triggered the government to cut down on their attempt to transfer guilt onto drivers, but rather encourage them to switch to EV’s.
To help the government with their pact to abolish all diesel and petrol cars, they have decided to exempt Benefit In Kind (BIK) tax on company EVs from April 2020 to 2021. This decision stemmed from a review of the industry changes. This occurred from the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) which was carried out last year. Axing company EV tax will not only work as an incentive for more businesses to use EVs, but it will also be that one step further to a greener, emission-free future.
In this article, we will discuss what Benefits In-Kind for company cars are and the advantages of your business transitioning to company EVs.
What Is a BIK For Company Cars?
Benefits In-Kind (BIK) are extra incentives that you can give to employees which are separate from their wage or salary. However, these benefits come with additional tax implications for both the employee and your business. Two examples of a BIK are a company car or a car allowance.
Whether it’s a car allowance you are given as a BIK or the actual car, both can come with car tax implications. Being given a company car is a significant advancement which eliminates the concern of insurance, maintenance and servicing costs for the employee. Therefore, the company will charge an additional car tax, combining the vehicle price, the car emissions and fuel agreement.
This supports why the government has decided to abolish car tax on company EVs, making EVs a more tax-efficient option which points towards a greener future.
What Are The Benefits Of No Tax Company EVs?
Company EV Tax Rates Lowered For Your Employees
Depending on the g/km (gallons per kilometre) of Co2 that your company EV emits and its electric range, employees will be exempt from paying car tax in 2020 until 2021. By 2021, the employee will be required to pay at least 1% of car tax and at least 2% by 2022. However, this is still a significantly lower amount of car tax than what would be required if it was a manual company car. Therefore, this is a great point to offer when hiring new employees.
If you want to find out how much EV tax an employee is required to pay for your company EV, click here to view the BIK tables created by the government. These include tax percentages for company EVs registered both before and after April 2020.
Access To OLEV Charging Point Grant
The Office For Low Emission Vehicles (OLEV) grant is a government grant for EV home/business chargers. It is also known as the Electric Vehicle Homecharge Scheme (EVHS). The OLEV grant can provide up to £500 off the cost and installation of a charging point and can be claimed once per EV.
How To Qualify For The OLEV Grant
There are a range of company EVs that are eligible for the OLEV EVHS grant. All battery EVs are eligible, but not all plug-in hybrids are. Click here to check which EVs are eligible for the scheme. If your company EV is eligible for the OLEV grant, then all you have to do is answer some simple questions and share some documents to get started with your application.
There are also a few more considerations that your business must take into account before applying for the electric charging point grant. These are:
- That your workplace must have dedicated off-street parking available for employees and visitors.
- That your business must be able to pinpoint the future need for EV charging points. However, you don’t have to have any employees that drive EVs at that time.
- That you have to have the work carried out by an OLEV-approved installer.
You Can Become An Eco-Friendly Business
By the end of 2019, there were approximately 265,000 electric vehicles on UK roads which seems like an astonishing amount. However, it’s said that EVs would have to hit sales of at least 600,000 to match 2020’s current vehicle emissions target. So, if you choose to convert your company cars to EV’s, you will become a more efficient, eco-friendly business and also contribute to exceeding the vehicle emissions target.
Do You Need Advice On Your Tax Expenses?
Do you need some more advice on how to manage your small business’ tax expenses? At Stonehouse Accountants, we are fully committed to providing our clients with high quality, reliable accountancy, taxation and advisory services. If you would like more information, don’t hesitate to contact us here or call us on 01733 265888.