Company drivers could save as much as 95 percent on tax costs if they switch to an EV in the second half of 2020. It’s predicted new rules favouring zero-emissions vehicles could change the make-up of office car parks almost overnight.
A new Benefit-In-Kind (BIK) tax structure will come into effect in April 2020, reducing the rate from 16 percent to zero.
According to Deloitte, that means a company with around 900 diesel or petrol-powered cars could be expect to save more than £1.9 million over the course of a year.
A diesel hatchback company car with a list price of £30,000 can cost high-income individuals around £18,000 over two years. By contrast, with the new BIK rate, an electric vehicle will cost just £916 over that two-year typical replacement cycle.
“We’ve seen electric vehicle (EV) popularity increase fourfold over the past year alone,” said Michael Woodward, UK automotive lead at Deloitte.
“For those thinking about making the switch, the tax changes for company cars from 6 April 2020 are certainly a strong incentive. With a surge in demand likely, the question remains whether both manufacturers and businesses are ready.
“Over the next three years, car manufacturers will need to review the scale of their production to accommodate growth and assess supply levels into the UK. Fleet sales will drive the majority of demand and manufacturers will be keen to prevent missing out on sales due to lack of supply.”