Company cars and BIK tax

newparent77

Hi - hoping someone can help with a quick company car question which I'm sure is very obvious! I have the chance of having one through work, and it's the first time I'll have had one, so just wanted check something.

How do I work out how the car might affect my salary? Do I add the BIK tax to my salary, e.g (and these are not exact figures):

I earn £40,000. The car is an EV with a P11D value of £45,000 and a BIK tax rate of 2%. So the BIK tax is 2% of £45,000, which is £900. So do I add that £900 to my salary so I'm effectively earning £40,900?

Hopefully that makes sense!

DullGreyGuy

Basically... assuming you have no other P11d items like private medical etc. 

stuhse

Yes thats it, EVs and plugin hybrids really work as company cars. You effectively the pay 20% of 900 ie 180 per year or £15 a month to have a car !!! A full EV just wouldnt work for the miles i do, Ive just gone from a diesel Skoda Kodiak which added 12600 to my salary to a Plugin Hybrid Toyota RAV4 which adds only 3200 .  Its a joke really,   my kodiak could do over 50mpg on a run, whilst the Toyota is a 2.5l petrol and is lucky  see 30mpg once ive used the 30miles or so of electric first thing in the morning.  The tax man though massively incentivizes the plugin hybrid as apparently far greener.

Stateofart

The tax man though massively incentivizes the plugin hybrid as apparently far greener.

But companies are banning them, as no one is charging them :-)

newparent77

Thanks all, much appreciated!

stuhse

Stateofart said:

The tax man though massively incentivizes the plugin hybrid as apparently far greener.

But companies are banning them, as no one is charging them :-)

Interested in this,  how does no one charging them affect companies?

born_again

stuhse said:

Stateofart said:

The tax man though massively incentivizes the plugin hybrid as apparently far greener.

But companies are banning them, as no one is charging them :-)

Interested in this,  how does no one charging them affect companies?

Because they cost more to run.. MPG, due to lugging a battery & motor around that is not being used as it should.

stuhse

I see what you mean, for people with free fuel allowance.  In my case i have to pay for my fuel and can only reclaim business miles...so failing to charge costs me money not the company i work for.  

Exodi

Spot on OP, if you're in the 20% tax bracket it'll cost you £15 p/m or £30 p/m in the 40% tax bracket.

EV's are great in this regard, non-EV vehicles have double digit BIK rates. You can also see a benefit on charging, depending on the method - for example:

stuhse said:

I see what you mean, for people with free fuel allowance.  In my case i have to pay for my fuel and can only reclaim business miles...so failing to charge costs me money not the company i work for.  

Most in your situation would be reimbursed for business miles at the Advisory Electric Rate of 9p/mile. Most EV's can achieve 3 miles per kWh, so effectively being reimbursed 27p/kWh. This is effectively neutral with the typical cost of home electricity. There is a small upside where it looks like the energy price cap will bring the cost of electricity down ~14% in April, but realistically we should expect to see the AER follow soon after.

If you're public charging, you're effectively 'losing out' as is often double/triple the cost of home electricity. You should do everything you can to avoid this

However, if you were to sign up to an EV, which can provide electricity for as little as 7p/kWh during the night (but i'll use 9p/kWh as it's more common and divides easier) - you would be paying around 3p per mile, but be getting reimbursed 9p per mile.

Betterthanlife

stuhse said:

Yes thats it, EVs and plugin hybrids really work as company cars. You effectively the pay 20% of 900 ie 180 per year or £15 a month to have a car !!! A full EV just wouldnt work for the miles i do, Ive just gone from a diesel Skoda Kodiak which added 12600 to my salary to a Plugin Hybrid Toyota RAV4 which adds only 3200 .  Its a joke really,   my kodiak could do over 50mpg on a run, whilst the Toyota is a 2.5l petrol and is lucky  see 30mpg once ive used the 30miles or so of electric first thing in the morning.  The tax man though massively incentivizes the plugin hybrid as apparently far greener.

I would imagine the BiK will start to rise on EV's once ICE cars become less popular, the same as VED will on EV's

Penguin_

Betterthanlife said:

stuhse said:

Yes thats it, EVs and plugin hybrids really work as company cars. You effectively the pay 20% of 900 ie 180 per year or £15 a month to have a car !!! A full EV just wouldnt work for the miles i do, Ive just gone from a diesel Skoda Kodiak which added 12600 to my salary to a Plugin Hybrid Toyota RAV4 which adds only 3200 .  Its a joke really,   my kodiak could do over 50mpg on a run, whilst the Toyota is a 2.5l petrol and is lucky  see 30mpg once ive used the 30miles or so of electric first thing in the morning.  The tax man though massively incentivizes the plugin hybrid as apparently far greener.

I would imagine the BiK will start to rise on EV's once ICE cars become less popular, the same as VED will on EV's

They will indeed https://www.fleetnews.co.uk/fleet-faq/what-are-the-current-bik-bands-/3/