Despite the potentially high personal tax charge, many employees still enjoy and prefer the convenience of being offered the use of a company car by their employer. Those employers familiar with the benefit-in-kind tax rules will be aware the tax impact on the employee is much lower for those that choose lower emission cars and/or electric cars.
On 6 April 2020, new benefit-in-kind percentage bands were introduced which took into account very low-emission cars and electric cars, favouring full electric cars more.
This is not the first time the Government has used tax policy to try to encourage more drivers to make the change to electric.
For five years from 6 April 2010, providing a zero-emission electric company car was tax-free to the employee but this failed to generate any big take-up, potentially due to the lack of car choice and supporting infrastructure.
Electric cars are, however, now becoming more mainstream. With more options on the market and with better infrastructure, they are now a much more viable option for an employer looking to provide an employee with a tax-efficient company car.
The past few years have also seen a significant increase in awareness of climate change among the general public and how individuals’ choices can contribute to a greener future. Employers have also been taking this on board.
Those that provide employees with company cars have been recognising that changing their fleet to low or zero-emissions vehicles can help contribute towards this common goal and be an attractive option to their staff from a personal perspective.
There are also many financial reasons why both the employer and employee might wish to make the switch.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.