Company Car Tab BiK reduce to 0%

[WannabeOwner]

Company Car TAX BiK reduced to 0%

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

Paragraph 3.13 if you want to wade through it.

https://assets.publishing.service.g...190617_-_WLTP_-_summary_of_responses_v2.2.pdf

I haven't seen anything about Luxury Tax

EDIT: Grrrr ... can't fix the typo in Title

 

[MrBadger]

Things like ‘car tax’ are normally announced in the budget or whatever they call it now.

 

[WannabeOwner]

Be interesting to see if it is in the mainstream press tomorrow. That GOV PDF is dated July 2019 so "recent" ... but ...

 

[Rooster6655]

It’s good news for existing company car owners.

I think there is going to be huge demand for fleets to switch to electric and I just hope infrastructure can cope as well as production capabilities of manufacturers.

 

[WannabeOwner]

I think there is going to be huge demand for fleets to switch to electric and I just hope infrastructure can cope as well as production capabilities of manufacturers

I'm curious about this. I suppose if Business is providing cars then they have Cash / Finance for the purchase already budgeted, so maybe it is a much faster "demand lever" than just offering some cash to Joe Public? I suppose it is also cash-neutral for HMRC ... they are swapping depreciation for 100% capital allowance (and tax on profit on disposal), maybe that's the reason - "costs nothing" ... although the differential BiK EV/Petrol is significant tax loss

I also can't see that dropping BiK from 2% to 0% is going to make any difference (compared to the huge differential between EV and Petrol BiK). Getting rid of Luxury Tax on EV would be a much PR move IMHO ...

Can't see it making that much difference though ... if it is a few tens-of-thousands of extra EV cars a year (could it be that much?) that won't trouble Tesla - although it might if all countries did it! It would trouble the others though, the likes of iPace are only making 20K p.a. AFAIK.

Can't help thinking it would be better to just provide assistance to anyone that wants to buy an EV (like Norway has done - its either No-VAT or Low-VAT on EVs there; 50% of their new car sales are EVs )

 

[WannabeOwner]

Be interesting to see if it is in the mainstream press tomorrow.

Can't see anything ... other than Fleet and Company Car rags e.g.

Government announces company car tax rates to April 2023

 

[Rooster6655]

Can't see it making that much difference though ... if it is a few tens-of-thousands of extra EV cars a year (could it be that much?) that won't trouble Tesla - although it might if all countries did it! It would trouble the others though, the likes of iPace are only making 20K p.a. AFAIK.

Yes I was going to say excluding Tesla regarding production constraints, 2% BIK was already small especially compared to the current 16% so its just an added bonus to get an extra reduction. I'm just thinking the likes of Niro/Kona are going to be backed up for 5 years if their orders increase anymore

I also don't see a huge increase just because of it going to 0% from 2% as the reduction from 16% will likely have persuaded many decision makers already, a lot of companies will probably consider cars below the luxury tax bracket if they can get the cars of course but I don't think its going to put people off choosing Tesla and the benefits they offer over others such as production, range, supercharging.

 

[tess19]

The resale values of EVs is going to shoot up....................... or at least not plummet after leaving the forecourt.
Another reason for getting a Tesla. With Elon saying there will be no imminent major refresh, the current X&S will hold their values even better.

 

[Rooster6655]

The resale values of EVs is going to shoot up....................... or at least not plummet after leaving the forecourt.
Another reason for getting a Tesla. With Elon saying there will be no imminent major refresh, the current X&S will hold their values even better.

The price people pay for ICE cars compared to the production cost is usually higher than Tesla and the margins get sucked up by dealer networks and advertising, so its easy for your car to become worth less quickly.

The good thing about Tesla cars is that they have small margins (in theory) so you know you aren't over paying for what you are buying, only with time we will see how things play out but things like the drive train and batteries have more value long term compared to an ICE IMO

 

[Peteski]

Nice little bonus!

 

[Jason71]

it's not the 0% that is the big deal it's the 3 years. CC's are usually on a 3-4 year cycle so knowing your bik isn't going to just jump back up to 16% in 2021 may make the difference. That combined with the ability to get EVs now that are suitable for company users i.e ones with a 200+mile range I think will tempt a LOT of CC users. Compared to an ICE car you are now looking as a potential saving in tax of £3000+ per year for the next 3 years. Thats a lot

 

[djgillett]

I'm curious about this. I suppose if Business is providing cars then they have Cash / Finance for the purchase already budgeted, so maybe it is a much faster "demand lever" than just offering some cash to Joe Public?

More than half of new car sales in the UK are company cars/fleet cars - so giving business more incentive to buy EVs is, for sure, a massive demand lever!
It'll also get them to the used market faster (a company car is swapped after 3-4 years, the average private new car is swapped after 6 years (US stat but probably similar)).

 

[Peteski]

it's not the 0% that is the big deal it's the 3 years. CC's are usually on a 3-4 year cycle so knowing your bik isn't going to just jump back up to 16% in 2021 may make the difference. That combined with the ability to get EVs now that are suitable for company users i.e ones with a 200+mile range I think will tempt a LOT of CC users. Compared to an ICE car you are now looking as a potential saving in tax of £3000+ per year for the next 3 years. Thats a lot

It's good news, but the same article does talk about it reverting back to the originally planned 2% from 2022-23 and who knows what the government will decide later on? Certainly not guaranteed to be 0% for the next 3-4 years, but should at least remain very low.

 

[WannabeOwner]

More than half of new car sales in the UK are company cars/fleet cars

Blimey!

We don't give Company Cars (any more) because staff used to compare their Salary with "National Average" ignoring Car, Health Care and all the other perks we gave them ... and management spent far too much time having to remind them of that when they complained how badly paid they were ...

... now they are paid above average (well, they were before ... but) ... with no perks ... but we really don't want to get back to giving them a car ... but we do want to encourage them to get an EV ... dilemma!

(I have asked that question in another thread, if anyone has any bright ideas that would be appreciated

Company Employee Loan For Ev Purchase?

 

[EchoVictor]

Blimey!

We don't give Company Cars (any more) because staff used to compare their Salary with "National Average" ignoring Car, Health Care and all the other perks we gave them ... and management spent far too much time having to remind them of that when they complained how badly paid they were ...

... now they are paid above average (well, they were before ... but) ... with no perks ... but we really don't want to get back to giving them a car ... but we do want to encourage them to get an EV ... dilemma!

(I have asked that question in another thread, if anyone has any bright ideas that would be appreciated

Company Employee Loan For Ev Purchase?

My company has just given a pay deal to one work group, part of which was a credit towards perks. Gym membership, dental, car lease (through Zenith) etc. All perks taken off gross salary (sacrifice).

 

[MrBadger]

...car lease (through Zenith)...

Thats meant to be a perk? We had the same and even with salary sacrifice, it was cheaper to go indy. Not that I did. As well as always buying outright, our company then imposed lots of restrictions on what we could and could not specify on the car. I don't think anyone in the company had a car on company lease deal.

 

[EchoVictor]

Thats meant to be a perk? We had the same and even with salary sacrifice, it was cheaper to go indy. Not that I did. As well as always buying outright, our company then imposed lots of restrictions on what we could and could not specify on the car. I don't think anyone in the company had a car on company lease deal.

No, I don’t know anyone who’s signed up. They don’t offer any tesla vehicles

 

[Rob R]

Company Car TAX BiK reduced to 0%

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

Paragraph 3.13 if you want to wade through it.

https://assets.publishing.service.g...190617_-_WLTP_-_summary_of_responses_v2.2.pdf

I haven't seen anything about Luxury Tax

EDIT: Grrrr ... can't fix the typo in Title

This is correct, but it seems it is temporary only, another one year, headline grabbing stunt by Government instead of a steady, consistent, well worked out policy. Just drop it to 2% and keep it there.
It would not surprise me if they do not scrap/cut the £3500 grant at the same time as they cut the BiK. That's the chaotic way the UK Government (doesn't) works.

 

[WannabeOwner]

it seems it is temporary only, another one year, headline grabbing stunt by Government

I thought that was exactly what it said, no?

"By providing clarity of future the appropriate percentages, businesses will have the ability to make more informed decisions about how they make the transition to zero emission fleets"

"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"

 

[WannabeOwner]

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 ?

https://www.gov.uk/expenses-and-benefits-electric-company-cars/

1. Do you own or hire the car?
   No, the employee owns it
   Change this answer
   
   
2. Who pays to charge the car?
   You, the employer
   Change this answer
   
   
3. Does your employee use the car for business or personal journeys?
   Both business and personal
   Change this answer
   

You need to pay tax and National Insurance on the electricity used to charge the car
You must work out the cost of the electricity you paid for and report it to HMRC as a benefit.

Your employee can claim Approved Mileage Allowance Payments (AMAPs)for the miles they travelled on business. They may also be eligible for Mileage Allowance Relief (MAR).