In the UK, a company car is a common perk for salaried employees. According to Electric Vehicle Charging Point Quotes, an agency that helps EV drivers set up charging stations, there are around a million company car drivers in the UK, and this number has been stable for many years. These cars aren’t exactly free – they’re subject to a national Benefit in Kind tax, which applies to most non-cash benefits received by employees.
In the case of cars, the Benefit in Kind tax rate is based on the value of the vehicle and its CO2 emissions, and for higher-income earners, the cost can be substantial. For example, EVCPQ calculates that a higher-rate taxpayer with a company-provided 3 Series BMW might pay as much as £3,360 per year – over 10% of the list price of the car. Highly-paid execs driving fancier cars can pay as much as £1,000 per month, or even more.
Recently, in order to encourage company fleets to adopt EVs, Her Majesty’s Revenue and Customs (HMRC) announced that it would reduce the Benefit in Kind tax rate for zero-emission vehicles from the current 16% to zero.
Of course, like many things in The Isles these days, tax and environmental policies are in a state of limbo, and whether this new pro-EV policy becomes law will depend on the results of the upcoming election and the ongoing machinations on Brexit. The Green and Labour parties have proposed a policy of net zero emissions by 2030. Other parties are less ambitious, but even the Conservative party has announced a 2050 target for zero emissions. As EVCPQ puts it, “It is clear that there is a major drive to a zero-emission environment.” UK drivers of higher-emission vehicles can expect to see their tax rates rise sooner or later.
The Benefit in Kind tax is not the only financial penalty for driving a polluting vehicle in the UK. EVCPQ compared the costs of running a petrol and electric vehicle for one month in Central London. Taking fuel costs into account, as well as various fees (Low Emissions Zone fee, Congestion Charge, Vehicle Excise Fund), the average monthly cost of driving on petrol works out to a whopping £2,255, compared to £20 for driving electric.
Source: Electric Vehicle Charging Point Quotes