Company Car: Benefit in kind



The tax rates for company cars are changing from 6th April 2020 and it could be good news if you're looking at a fully electric vehicle.


Currently owning a zero emission EV as a company car comes with a benefit in kind rate of at least 16%. This mean that a £50,000 vehicle will come at a BIK cost of £2,704 per year for a basic rate taxpayer, or £4,304 per year for a higher rate taxpayer. From 6th April 2020 16% will become 0%, rising to 1% in 2021 and 2% in 2022. This means across the 3 years a basic rate taxpayer would incur a BIK charge of £507 and a higher rate taxpayer would pay £807. A significant reduction.


This comes hand in hand with cars emitting under 50g/km of CO2 qualifying for 100% capital allowance deductions in the first year of ownership, potentially shedding 19% of a car's list value off your Corporation Tax bill.


Combine these two changes and it could mean that purchasing an electric vehicle as a company car is the first thing to look at for the next couple of years.

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