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ELECTRIC VEHICLES FOCUS


Let’s take a switched-on approach


Is your company ready to go electric? If you’re thinking about making the switch to EVs for your employees, here are five things to consider


Benefit in kind


In the tax world, benefit in kind (BiK) is a benefit, such as a company car, with a monetary value. As such, it is subject to tax.


By Stuart Clark Managing Director, Russell & Russell Chartered Accountants


The BiK rules are notoriously complex. In respect of company cars, the BiK is based on a calculation which brings together the car’s list price (not its value or the price paid for it), its C02 emissions and the user’s tax circumstances. It’s best not to try working this out on your own: your professional adviser is best placed to guide you to an optimal outcome. Drivers can be certain, however, that the BiK tax charge for a traditional, fossil fuel-based vehicle significantly outstrips


“Tax on company cars is a tricky subject, but one that experienced accountants deal with every day” 46 CABLEtalk APRIL/MAY 2021


the charge for an electric car or van. Indeed, for the 2020/21 tax year, the fully electric car tax rate was set at zero. Even in coming years, the rates will be remarkably light – 1% in 2021/22 and 2% the following year – but it’s reasonable to assume that as more EVs join the company car fleet, rates will rise again. The takeaway here is to get professional advice. Tax on company cars is a tricky subject, but one that experienced accountants deal with every day.


Salary sacrifice It’s been reported that as many as seven out of 10 drivers are aware of the Government’s Cycle to Work scheme which allows staff members to purchase a new bicycle from their salary before income tax and National Insurance have been deducted. However, less than 10% are aware of a similar programme for cars that heavily favours EVs. Now known as Optimal Remuneration Arrangements, the salary sacrifice for EVs has been around since 2016, ensuring the ultra- low emission vehicles (ULEVs) are as affordable as possible. The tax benefits have now mostly been removed for petrol and diesel- powered cars but remain in place for ULEVs.


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