Car tax changes make electric cars ‘significantly cheaper’ than petrol and diesel models

Martin Lewis gives money-saving advice on VED car tax

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Ms Howarth says updates to benefit in kind rates on electric company cars has allowed employees to save up to 40 percent on their monthly car costs. The massive savings has led to a surge in demand for vehicles with interest having “never been higher”.

She said enquiries over salary sacrifice car tax schemes have increased “sevenfold” in the last year as drivers are desperate to secure cheap electric cars.

Benefit in kind rates were completely scrapped for electric vehicles in April 2020, dropping from 16 percent to zero.

Ms Howarth said: “Salary sacrifice makes electric cars a no brainer – making them significantly cheaper than their petrol or diesel counterparts.

“And with incredibly low company car tax rates on EVs, demand has never been higher.

“Almost a third of employees want the option of an EV as a company car and our own enquiries from businesses have risen seven-fold in the last year alone.

“The government has made this possible with incredibly low company car tax rates on EVs, giving businesses an opportunity to offer their team a hugely valuable benefit, whilst also doing something great for the planet.

“Employees are delighted to see how they can save 30-40 percent every month on their car costs, by saving on income tax and national insurance.”

Her comments come just a day after benefit in kind rates were increased for electric vehicles.

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Costs rose from zero to one percent for fully-electric models in an increase which could cost some drivers over £100 per year.

But rates were still lower than many petrol and diesel cars which are now paying over 30 percent in benefit in kind charges.

Ms Howarth has previously warned the increase was a “negligible” rise and predicted demand levels would not slow down despite the extra charges.

She added: “Salary sacrifice is essentially a zero-cost, zero-effort tool for businesses to fight climate change and save the planet.

“If just 10 percent of UK employees switched to electric – we could decimate CO2 emissions of cars, while collectively saving almost £4bn per year.

To help boost the takeup of fully-electric models, Octopus Electric Vehicles have launched a new Electric Dreams service.

The new programme will support the growing number of employees looking to access salary sacrifice schemes across the UK.

They said the new scheme will give employees access to every electric vehicle on the market today with a range of over 100 miles, a total of 30 vehicles.

They said an extra 20 cars will be added to the scheme later in 2021 to ensure vehicles are available for every type of road users.

James McMaster, CEO of fitness firm Huel, who have signed up to Octopus’ new programme said the scheme will offer “real benefits” to employees.

He said: “We’re not the sort of company that would go with a traditional car scheme.

“Being able to offer something that promotes cleaner transport has been a real benefit to helping our team live our mission of a more sustainable world .

“They are amazed at what a brilliant deal this is.”

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