Happy Benefit in Kind day!

06-04-2020, 17:07:31

Happy 0% benefit-in-kind day! From today (06/04/2020) Benefit in kind for electric vehicles drops to 0%, while in 2019, BIK worked out at 16%, this adjustment to 0% represents a massive saving. This accompanies changes across the board favouring lower emission vehicles.

Below is some more information about benefit in kind and how it can help you as a company car driver, as well as a non-company car driver considering making the switch.

But what is benefit in Kind?

When you engage in any form of salary sacrifice scheme on a car through your business, you will often find that the government taxes this perceived benefit, through a system called Benefit in Kind (BIK).

Often, this BIK is measured against the value to you of your car, accounting for things like the car’s value, as well as fuel type.

The value of this can be reduced in cases such as; you use it part-time, you make a contribution towards the cost, you receive fuel contributions or, as is most important to this article: It has low CO2 emissions.

What does it mean to me as a company car driver?

The savings can run up to £1300 a year as shown on our chalkboard we advertised in our centre very recently!

Across your company car catalogue, it can mean that an electric car represents a massive saving when compared to other combustion models in class, meaning you can operate an electric car in a higher class than normal, or run a similar class to your existing vehicle at a massive saving to your fuel costs, and with the complete removal of BIK tax.

Additionally, with the transition of emissions testing moving from NEDC testing to WLTP, some high CO2 combustion vehicles may well see their BIK taxation increase, in line with the government’s green fleet targets.

What can it mean to me as a non-company car driver?

If your company is offering a salary sacrifice scheme this can represent a much more attractive offering than previously.

Normally on salary sacrifice schemes, you would pay a monthly fee for the car and a benefit in kind figure as a form of tax, with the movement to 0% benefit in kind an electric company car can represent a surprisingly low salary sacrifice, as well as a vast decline in maintenance and fuel costs when compared to your current combustion vehicle.