The government needs to change its company car benefit-in-kind (BIK) tax scale in November 2018’s budget to encourage the take-up of more pure electric vehicles (EVs), according to salary sacrifice experts Fleet Evolution.
While the industry trend away from diesel continues, Fleet Evolution says the BIK system on vehicles emitting 0-50g/km of CO2 – rising from 9% in 2017-18 to 16% in 2019-20, before falling back to 2% in 2020-21 – is dissuading businesses that purchase on three-year cycles from buying zero-emission electric cars at all. So far in 2018 alternatively-fuelled vehicles (AFVs) took just 5.5% of the market.
The lower 2% rate from 2020-21 – as long as the EV can travel 130 miles on electric charge only – is designed to be distinct from current-generation plug-in hybrids (PHEVs), which typically offer sub-50g/km CO2, but don’t have an electric-only range of more than 30 miles, and for that reason will be taxed at 14% from 2020-21. But meantime, Fleet Evolution believes that lumping both EVs and PHEVs in the same CO2-related BIK bracket is severely harming EV adoption when added to high initial list prices.
Fleet Evolution’s managing director, Andrew Leech said: “We would like to see the government remove the contradiction of an aggressively escalating company car tax followed by a huge reduction in the tax rate, by introducing the 2% rate from the 2019 tax year and thus actively promoting the uptake of longer range EVs much sooner.”
