Company Car Tab BiK reduce to 0%

[Peteski]

"for cars registered before 6 April 2020 will not change during 2020-21. These rates will be frozen at the 2020-21 level for 2021-22 and 2022-23"

That paragraph does not apply to zero emission cars, only petrol/diesels affected by the switch from NEDC to WLTP standards, while they work out the implications of the increased CO2 ratings. There was another statement that specifically said that zero emission cars would return to 2% by 2022-23:-

"all zero emission company cars will attract a reduced appropriate percentage of 0% in 2020-21, 1% in 2021-22, before returning to the planned 2% rate in 2022-23"

 

[WannabeOwner]

Thanks. Not sure why they saw the need to reduce from 2% to 0% (particularly given the farce of the current year which "they couldn't change 'coz paperwork already done" or somesuch ...) as I can't see it making enough difference to purchase decisions to move-the-market ... but 2% (e.g. thereafter) is encouraging in terms of EV takeup ...

Maybe more to come as they feel the need to pump-prime EV takeup (for non-company cars, and companies like mine where we don't want [i.e. hassle/admin] to have to provide company cars, but are quite happy to "sponsor" free electricity for employee EVs)

 

[pjuk]

Thanks. Not sure why they saw the need to reduce from 2% to 0%

Marketing I guess. 0% sounds more appealing than 1 or 2%. If it's not hurting the treasury's pocket then why not. But as it has been said before I can see them scrapping the £3.5k grant if the EV market suddenly takes off.

 

[WannabeOwner]

0% sounds more appealing than 1 or 2%.

Can't argue with that!

I can see them scrapping the £3.5k grant if the EV market suddenly takes off.

No disagreement there, but perhaps we instead we get a decision "Got to solve this" and do something major, like Norway VAT reduction.

 

[ItsNotAboutTheMoney]

Marketing I guess. 0% sounds more appealing than 1 or 2%. If it's not hurting the treasury's pocket then why not. But as it has been said before I can see them scrapping the £3.5k grant if the EV market suddenly takes off.

I think it's simpler than that: politics. It's easier to cut for polluters, while cutting for EVs. It's company cars, for which hoi polloi would probably be happy to see no breaks..

 

[WannabeOwner]

Actually ... does 0% BiK mean "no paperwork" for employer? Maybe there is a (more) tangible benefit

 

[pjuk]

Actually ... does 0% BiK mean "no paperwork" for employer? Maybe there is a (more) tangible benefit

I’ll let the accountant know that I expect a 2% reduction in fees too then.

 

[tess19]

If there is no BIK, does that mean there is no additional NI to pay as well?

 

[Peteski]

If there is no BIK, does that mean there is no additional NI to pay as well?

Correct.

 

[arg]

Actually ... does 0% BiK mean "no paperwork" for employer? Maybe there is a (more) tangible benefit

Unfortunately, there's almost as much paperwork. You've still got to declare the car and report on P11D. You don't have to remember to pay the Class 1A NIC (unless of course you've already got to make a payment for some other BIK). If you are payrolling the BIK (as I do because HMRC repeatedly cocked up collecting it via the tax code which is the alternative), then 0% means you don't have to compute the monthly amount.

I agree with your earlier comment - if they've found a few quid down the back of the sofa as the report seems to be suggesting, better to spend them on eliminating the luxury element of road tax for EVs rather than reducing BIK from 2% to 0% for a year.

 

[Jason71]

Unfortunately, there's almost as much paperwork. You've still got to declare the car and report on P11D. You don't have to remember to pay the Class 1A NIC (unless of course you've already got to make a payment for some other BIK). If you are payrolling the BIK (as I do because HMRC repeatedly cocked up collecting it via the tax code which is the alternative), then 0% means you don't have to compute the monthly amount.

I agree with your earlier comment - if they've found a few quid down the back of the sofa as the report seems to be suggesting, better to spend them on eliminating the luxury element of road tax for EVs rather than reducing BIK from 2% to 0% for a year.

Different departments, Different budgets.
BIK = HMRC
ART = DVLA/DFT
The decision would probably have been an isolated one in an some HMRC committee somewhere. You are assuming a level of holistic joined up government / thinking that simply does not exist. I don't even mean this as a criticism. iIs just how it is.

 

[arg]

Different departments, Different budgets.
BIK = HMRC
ART = DVLA/DFT
The decision would probably have been an isolated one in an some HMRC committee somewhere. You are assuming a level of holistic joined up government / thinking that simply does not exist. I don't even mean this as a criticism. iIs just how it is.

Normally true, but the document referenced at the head of the thread is considering both at once! However, they may well be different budgets.

 

[arg]

On a slightly side note I did turn up this - looks like "Free Electricity at Work" is only no BiK if it is a company car ?

That is old info. Company cars have always been covered, but employee-owned cars have only been covered since April 2018 (and even then the Government screwed up, having announced the change in the budget but then forgot to put the clause in the finance bill and had to tell people that retrospective legislation would follow). But it seems they have now done it with the retrospective clause as promised.

 

[Jason71]

Fleet news ran a survey in which 70% of respondents said due to the low BIK they would like to switch to an EV.
There are 960,000 CC drivers in the UK. Assuming a worst case of 4 year cycle that means 168,000 CC drivers are eligible for an upgrade next year and want an EV.
Not sure whether the average allowance of a CC runs to a Tesla but. This could be a real game changer for EV's in the UK

Here is the poll but have no idea how big the sample size is
Will the 0% BIK rate for pure EVs persuade you to make the switch?

 

[WannabeOwner]

Looks like from 2020 the BiK on EVs will be 0% (instead of 2% as currently projected)

My understanding is that this applies to cars registered on/after 06-April-2020

Also that (separately) it is proposed to apply to pre-existing cars, but that that has not yet passed into legislation

Anyone got better info?

I'm holding off additional EV purchase until 06-April, or clarification that a new purchase will definitely be included

 

[arg]

Legislation was passed some time ago reducing it to 2% from 2020-21: Finance (No. 2) Act 2017
And also the exemption for ULEVs from the nasty new 'optional remuneration' rules (see 120A (3)(c)): Finance Act 2017

The subsequent change to 0%/1% for 2020-21/2021-22 was supposed to go in this year's finance bill, to become the Finance Act 2020, following the budget. The budget was last planned to be on 6th November but has now been scrapped, and with the upcoming election who knows when and by whom it will be given! You can see the draft legislation ready to go here: Finance Bill 2019-20

However, if the government continues to be in such a shambles that it doesn't pass a Finance Act at all, then the 2% rate is already on the books which wouldn't be too bad. There is of course always the possibility of electing some party that believes company cars are for fat cats and introduces punitive rates - but that could happen any time.

The bit about registered on/after april 2020 I believe is only about the transition from NEDC to WLTP C02 figures, so not applicable to EVs where the figure is 0g however you measure it. So I think that's a red herring.


BTW, the exemption for workplace charging was passed here: Finance Act 2019

 

[WannabeOwner]

Thanks @arg. Yes, agree, I am only hair-splitting over 0% vs. 2% ... and either is a whole pile better than the 2019 rate we have currently!