Car tax updates to benefit-in-kind rates will lead to a “renaissance” of company cars which will help the country’s switch to electric vehicles. Chancellor Rishi Sunak will scrap the benefit-in-kind charges during his March budget which is expected to dramatically boost the take-up of fully-electric vehicles.
The updates will see added charges on electric company cars removed from 16 percent to zero in a bid to encourage the purchase of new electric vehicles.
Speaking to Express.co.uk, electric car expert, Dan Martin, CEO of Elmtronics claimed the changes would “undoubtedly” help the switch to EV vehicles.
He said: “The April 2020 car tax changes have been a welcome relief to company motorists with planned changes of zero percent Benefit in Kind payment for company car drivers with electric vehicles from the 5th of April, with an increase to just 1 percent from April 2021.
“Attitudes toward electric vehicles are changing fast, I’m confident we will see a renaissance of drivers reverting back to company cars to take advantage of the tax breaks, which will undoubtedly help with the overall country’s move toward electric mobility.”
READ MORE: This one car tax update is needed in 2020, says experts
Experts have said the changes would be a
The removal of the heavy charges will make fully-electric vehicles genuinely affordable to the majority of business owners.
Estimates reveal a new premium Tesla Model 3 could cost just £307 per month if purchased with a 48-month contract.
The luxurious electric vehicle would usually be around £530 per month in a giant 42 percent saving.
Smaller family vehicles are also set to be included in the heavy discounts with a Renault Zoe set to be 32 percent cheaper at £184 per month.
Car tax 2020: Changes will axe prices for some owners [INSIGHT]
Car Tax rules could change in 2020 [ANALYSIS]
Car tax changes could see a rise in company cars [COMMENT]
Volvo’s stylish XC40 hybrid model could also be set for a major price drop with a spokesperson saying the new model could cost just £160 per month.
The reductions are set to revitalise the customer car market with salary sacrifice schemes set to return to favour among business people keen to grab a discount.
A survey by DriveElectric revealed eight out of ten business people would be interested in securing a company car under the proposals.
In a statement to Express.co.uk, electric car expert Fiona Howarth revealed companies have approached Octopus Electric Vehicles for help in setting up salary sacrifice schemes for their workers.
Although benefit-in-kind rates are set to rise next year this will only be one percent in April 2021 and two percent by April 2022.
It means motorists will be able to enjoy discounted costs on electric vehicles for the next couple of years at least if customers do not wish to commit to a new vehicle straight away.
SMMT new car registration data revealed sales of electric cars have soared in the opening months of 2020.
February saw a 243.1 percent increase in the number of fully-electric vehicles purchased compared to the same month last year.
Analysis of the data shows an extra 217.8 percent have been sold over the first two months of 2020 than 2019.
In total, just over 6,500 EV’s have been sold so far this year compared to just 2,065 after February 2019.
However, fully-electric vehicle sales make up just under three percent of total cars sold so far this year with petrol and diesel still accounting for 90 percent of sales.
The scrapping of benefit-in-kind rates is part of the government’s approach to meet their 2050 zero-carbon target.
Alongside the car tax changes, recent developments will see the sale of new petrol and diesel cars will be banned by 2035 as well as extra investment in electric car infrastructure.