Chancellor Alistair Darling announced on 9th of December, that he would be exempting electric cars and vans from Benefit–in-kind tax for five years from April 2010.
This will save employees and employers.
A 20% tax payer who starts driving a company-provided £20,000 electric car will save £264 a year – almost the equivalent of a £500 pay rise.
The employer will save around £200 a year.
In addition, the chancellor has introduced a 100% first-year allowance for companies purchasing electric vans, enabling them to offset the cost of buying one of these vehicles against their corporation tax bill in year one.
Currently company drivers of electric cars face a 9% BiK bill, which is the lowest band.
The incentive is designed to get more companies to put electric vehicles on to their fleets.
The moves confirm the Government’s intention to encourage the rapid adoption of electric vehicle technology by companies.
The latest announcement has been welcomed by the fleet industry.
“We are really pleased that the chancellor has listened to our call to modernise the business tax regime and give a clear, long-term incentive for companies willing to be early adopters of electric cars and vans,” said John Lewis chief executive of the BVRLA.
“Together with the £2,500 – £5,000 incentive the government is planning to introduce from 2011 for people buying ultra-low carbon cars, these new measures will help speed-up the mass market adoption of sustainable road transport in Britain.
“We believe business users will be at the forefront.”
Motoring organisations have also added their voice of approval.
“The incentive for companies to go electrify their car fleets is to be welcomed as this will help provide a mass market for low-carbon vehicles and encourage a charging infrastructure to be established,” said the director of the RAC Foundation Professor Stephen Glaister.
