All you need to know about buying a tax smart car
It is no secret that the road tax is on the rise. With the government pushing to get diesel cars off the road, high car tax tariffs have been introduced to dissuade drivers to buy diesel cars.
In hand with this incentive, the Government have recently revealed that electric vehicles will be tax-exempt. This is an effort to encourage businesses and individuals to make the move towards minimal emission living.
BIK are the extra benefits given to employees as part of a benefits package. These benefits are not included in salaries or wages. However, benefits such as company cars can still have an impact on tax liability.
Having a company car offers better security to you as an employee as you do not need to pay insurance, maintenance, and servicing costs. In this option, the employee is taxed on a theoretical value of the benefit, which is a blend of the list price of the vehicle, emissions of the car, and whether the employee pays for private fuel used or not.
According to data from HMRC in 2017, the number of employees paying company car tax reached a five-year high. With electric cars being exempt from this tax for 2020/21, this makes having a company car a much more tax-efficient choice for employees than it has previously been.
No matter the registration date, pure electric cars with zero tailpipe emissions and certain plug-in hybrid cars will be taxed by the following company car tax rates for the next three tax years
· 0% during 2020/21
· 1% during 2021/22
· 2% during 2022/23