Having already given employers and employees an incentive to switch to electric vehicles, the Government has extended its new zero-emission vehicle policy even further. The latest change means that there will be a 0% benefits in kind rate for electric cars throughout 2021/2022.
With a slight increase to 1% in 2021/2022 and then a return to the 2% rate, switching to an electric motor brings benefits to both employers and employees. Fringe benefits, such as company vehicles or private health policies, are usually subject to income tax, as they’re considered to be part of your overall income or salary.
Of course, it’s always advisable to seek tax help from experienced accountants before implementing or modifying salary sacrifice schemes.
In a bid to increase the uptake of electric cars, however, the Government has reduced the fringe benefits rate for electric vehicles. With a 0% rate for perks throughout 2021/2022, employees’ motoring costs could be met by their employer, with no income tax owed on this benefit at all. Furthermore, employers won’t be liable to pay Class 1A NIC charges on the benefit either.
Salary sacrifice schemes have always been an effective way of boosting remuneration, but they do require expert planning and execution. Specialist tax accountants can help you to implement the new electric vehicle 0% fringe benefit rate within your business and assist with other elements of your salary sacrifice schemes.
To find out more about the tax and accounting benefits of switching to an electric fleet, why not get in touch with Exeter accountants today? Simply call Kirk Hills Chartered Accountants on 01392 494 904 and speak to a member of our team today.