Big tax incentives from April if you buy a new electric car in the UK
Apparently from April this year, drivers could save an average of £320 per month in income tax, Benefit in Kind and National Insurance by leasing a brand-new battery electric vehicle thanks to a ‘salary sacrifice’ scheme.
According to Tusker, which is a customer services focused company who manages fleets of cars for organisations within the public and private sectors, 90% of British motorists are unaware of the financial incentives of switching to an electric car.
In 2016 Government introduced legislation which ensured salary sacrifice would be one of the most affordable ways to drive ultra-low emission vehicles (ULEV) and electric vehicles (EV). It ensured that ULEVs, including EVs, would continue to be the most cost effective through salary sacrifice as they remained exempt from income tax and NI. When coupled together with access to an OLEV grant, electric charging savings and the introduction of 0% Benefit in-Kind taxation from April 2020, salary sacrifice is now the cheapest way to drive electric.
For drivers, this represents an average saving of £220 per month from 2019 to 2020 when compared with retail deals, on top of the savings they are able to receive through salary sacrifice – which amount on average to £100 per month saving on income tax and NI. And as insurance, breakdown cover and maintenance are included in some salary sacrifice schemes, as well as no deposit being required.
While 60 per cent of people who drive claimed not to know what salary sacrifice is, it’s clear that this is the most affordable solution for ordinary working people to drive electric.
Paul Gilshan, CEO of the leading UK car salary sacrifice provider, Tusker, said: “Salary sacrifice is nothing new but appears to be still an unknown to a lot of working people; it’s the solution to drive a new electric vehicle for both 20% and 40% taxpayers, but it seems the myth is that people think they can’t drive an EV unless they are on high salaries.
“Put simply, salary sacrifice is key to making battery electric vehicles affordable for the average British motorist and key to the UK significantly reducing emissions of transport.”
Meanwhile the AA suggested to ministers that VAT should be scrapped on electric vehicles to boost sales.