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How can my business save on BIK?

Businesses can save on Benefit in Kind (BIK) tax in relation to electric cars in several ways. BIK is a tax that employees pay on the benefit of having access to a company car for personal use. Electric cars can offer significant tax advantages due to their lower emissions and cost savings, making them an attractive option for businesses and their employees. Here are some strategies for saving BIK in relation to electric cars:

1. Choose low-emission electric cars:

   – The lower the car’s CO2 emissions, the lower the BIK tax rate. Electric cars have very low or zero emissions, which can result in a reduced BIK rate compared to conventional petrol or diesel cars.

2. Consider the list price:

   – The BIK tax is based on the list price of the car, including any optional extras. Choosing electric cars with a lower list price can reduce the taxable value and, consequently, the BIK liability.

3. Use salary sacrifice schemes:

   – Some businesses offer salary sacrifice schemes that allow employees to give up part of their salary in exchange for a fully electric car. This can result in tax savings for both the employee and the employer.

4. Implement a green fleet policy:

   – Consider adopting a green fleet policy that encourages employees to choose electric cars or other low-emission vehicles as their company cars. This can lead to overall reductions in BIK tax liability for the organization and its employees.

5. Utilise the Plug-in Car Grant:

   – In the UK, there can be government incentives or grants for electric vehicles, such as the Plug-in Car Grant. Taking advantage of these grants when they are available, can lower the purchase price of electric cars, reducing the BIK tax liability.

6. Install workplace charging points:

   – Providing workplace charging infrastructure can encourage employees to choose electric cars. Some tax benefits may be available for businesses that install charging points, which can also support employees in reducing their BIK liability.

7. Educate employees:

   – Educate employees about the tax advantages of electric cars and provide information on how they can minimize their BIK tax. Employees may need to keep detailed records of their personal and business mileage to calculate BIK tax accurately.

8. Consider electric-only policies:

   – Some businesses choose to offer electric cars as the sole company car option, ensuring that all employees who need a company car drive an electric vehicle. This simplifies BIK calculations and maximises the environmental benefits.

It’s important for businesses to consult with their accountant or finance experts to navigate the complex rules and regulations related to BIK tax and electric cars in their specific jurisdiction. Incentives can vary, and they are subject to change, so staying up to date is crucial for maximising tax savings. New Vehicle Solutions can help to guide you through the many options available to you and your business. Please contact our team on 01656 654321

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Page Last Updated: 02/11/2023
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