Changes to emissions calculations mean no BiK tax next year for electric cars
24th September, 2019
Following a move to new emissions regulations, electric car owners will not have to pay any Benefit-in-Kind (BiK) tax during the next financial year. The move comes after it was agreed that emissions calculations would use the new WLTP (Worldwide Harmonised Light Vehicle Test Procedure) emissions regulations.
WLTP offers a more accurate representation of fuel economy and emissions in the real world and as a result the treasury feels it can review tax laws to reflect the updated assessment.
However, whilst this is a positive move for electric car owners, vehicles which still use traditional fuels are likely to see an increase in the CO2 rating, with a knock-on effect to BiK tax.
Despite various incentives, electric car ownership still only accounts for a very small proportion of the UK car market and so whilst the move to update emissions data is welcomed, the impact is unlikely to be of benefit to many. By then end of June 2019 a total of nearly 220,000 electric cars had been registered in the UK, up from 3,500 in 2013. But limited range, battery life, charging times and a lack of charging points around the UK are the main factors holding the market back, with fleet managers reticent to convert from traditional fuels for any drivers regularly covering significant mileage.
Tim Haggard, Partner at Haggard Crowther, says ‘This is great news for those company car drivers that have made the move to electric cars, but we are still in that limbo period where the technology cannot keep pace with consumer demand”. He continues “The new emissions data creates a trade-off between employees wanting to reduce their personal tax burden and businesses needing an efficient vehicle fleet/mobile workforce. The positive news is that this will be a long-term change and so hopefully the market can catch up – we are certainly hearing about new models and further developments in the electric vehicle market daily”.