Martin Lewis gives money-saving advice on VED car tax
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New benefit in kind tax rules led to a massive upswing in take-up of plug-in and hybrid vehicles as drivers made use of the extra savings. Nearly one-fifth of the car leasing fleet now relies on electric powertrains as Diesel’s share fell below 50 percent for the first time.
The average CO2 emissions for cars leased by the BVRLA has also fallen from 107g/km to 105g/km in a new low.
The experts said the figures were around eight percent lower than the national average vehicle emissions.
BVRLA Chief Executive Gerry Keaney said the “long-awaited surge” was “expected” after the introduction of new tax rules.
He said: “Quarter three of last year delivered the long-awaited surge in BEV registrations that we expected after the introduction of the zero-rate BiK incentive.”
“A massive 21 percent of new business contract hire car registrations were BEVs, once again demonstrating that the company car sector is driving the transition to zero-emission motoring.”
New tax rules saw benefit-in-kind costs drop from 16 percent to zero percent for zero-emissions vehicles from April 2020.
This means drivers do not need to pay any Benefit in Kind charges if their company car emits no emissions.
This figure will increase to one percent in 2021 and two percent in 2022 meaning costs will rise but will still be massively reduced compared to previous values.
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The two percent figure will remain in place for a further couple of years up to the 2024/25 tax year to encourage drivers to switch.
In comparison, those who lease a combustion vehicle are still liable for charges of up to 27 percent when securing a model under a salary sacrifice scheme.
Late last year experts at Octopus Electric Vehicles claimed the number of drivers leasing electric vehicles had doubled since the new tax rules were introduced.
The group said they had seen a 91 percent increase in electric car leasing as drivers realised they could save up to 60 percent in some cases.
Fiona Howarth has previously said the updates were a “financial game-changer” for the market.
She said: “Changes to Benefit in Kind tax have been a financial game-changer for EV leasing.
“Add this to brilliant electric cars hitting the market and huge savings on running costs versus petrol cars, and EV’s are a total no brainer.
“It’s no wonder then that we are seeing a huge boom, with the number of companies ordering EVs via our salary sacrifice scheme growing five-fold since April.”
The changes mean higher rate taxpayers are able to lease a Tesla Model 3 Standard Range Plus for 48 months for an average of £342 per month with zero upfront costs.
Meanwhile, a similar combustion model such as an Audi A4 TFSI which would cost around £394 per month on personal lease.
Lower rate taxpayers can also secure a Renault ZOE for just £218 per month compared to £311 before the tax changes were introduced.
Poppy Welch, Head of Go Ultra Low said: “There has never been a better time to drive electric. 0% Benefit in Kind is just the latest in a host of benefits available to EV drivers.
“Not only does it complement the £3,000 Government plug-in car grant, the £350 Government home charging scheme, the exemption from Vehicle Excise Duty and London Congestion Charge, but it’s also enhanced by significant fuel, tax and maintenance savings.”
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