Car tax updates are coming into effect from April 6 with changes to benefit-in-kind rates set to affect all motorists who are looking at purchasing a new car. The scrapping of benefit-in-kind charges from 16 percent to zero for fully-electric vehicles could see company car sales and the take-up of electric vehicles dramatically rise.
Electric car experts say employees could save up to 40 percent on their car costs under the revolutionary scheme.
Speaking to Express.co.uk, Fiona Howarth said: “The benefit-in-kind rates dropping to zero for electric cars from April is a game-changer for EVs.
“It makes company cars attractive again and, combined with a salary sacrifice scheme, it can also enable employees to save 30-40 percent off their monthly personal car costs (in some cases even more) – including insurance, servicing, maintenance and even tyre replacement.”
Under the new proposals, employees will be able to use salary sacrifice schemes to snap up lucrative cars at budget prices.
Electric car benefit-in-kind rates are coming into effect
More business people are set to secure a cheap company car
Motorists could find Tesla’s Model 3 is available for up to 42 percent cheaper if it is purchased under a 48-month contract through a salary sacrifice scheme.
The vehicle usually costs around £530 per month but the discounts could see the car available for just over £300.
Savings are also likely to make city runarounds almost cheaper than public transport cards with a Renault Zoe potentially falling from £270 per month to just over £180.
In another giant reduction, Volvo’s XC60 hybrid model could be available for just £160 according to a Volvo spokesperson.
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Fiona Howarth told Express.co.uk she has already seen interest from businesses about setting up schemes for workers.
She said: “We’ve already seen a huge surge in demand for salary sacrifice schemes.
“Employees at those companies are snapping up the electric car build slots with the manufacturers, as they try to get their car asap to make the most of the low tax rate.”
Benefit-in-Kind rates are set to increase to one percent from 2021 and then two percent by 2022/23 for fully-electric models.
However, the budget prices will still dwarf the 16 percent tax rates currently paid by company car owners.
The cuts come as the UK government aims to boost the number of electric vehicles on the roads to meet their 2050 zero-carbon target.
Alongside the benefit-in-kind rates, electric car experts Drive Electric says owners of fully-electric vehicles will also benefit from lower “whole-life costs.
Owners of vehicles which produce zero-emissions will pay no yearly road tax bills or city emission charges and make massive fuel savings.
Mike Potter, Managing Director of Drive Electric said: “This suggests that, as long as incentives remain, the government’s target of all new car sales to be electric by 2035 – or 2032 – is achievable.
“In addition, private buyers will benefit from an increased supply of two-four year old used electric cars, spreading the benefit of this investment.”
He added: “With a wide range of new EVs currently coming to market, supported by financial incentives, 2020 is the ideal year for business users to convert to electric – and today’s company cars become vehicles for private motorists in a few years time.”
A survey by the group found eight out of ten employees were interested in taking up a company car under the new proposals.
Changes to Benefit-in-Kind rates were announced last summer with the UK government already announcing rates for all types of vehicles ahead of the planned introduction. Chancellor Rishi Sunak will rubber-stamp the policy in the 2020 Budget to be held on 11 March.