So you’re considering a company car. Your employer operates a car salary sacrifice scheme and you know it could save you money. You know enough about Benefit in Kind to understand the basic tax implications (and if you don’t, we’ve written a comprehensive guide that will answer your questions).
But now you’re unsure about how to choose the best company car for Benefit in Kind. Is now the time to go electric, or is it better to stick with a traditional model?
However, to help you see how Benefit in Kind tax works, we’ve developed this in depth comparison of the same car, both electric and diesel.
Let’s meet Sue. Earning £40,000 a year as a company administrator, Sue is 41 years old, lives in Watford with her husband and two teenage children. She wants a good reliable car for short journeys (taking the kids to after school clubs, weekly supermarket trips and family visits but never travelling far). The Kia Niro is an ideal choice for Sue but, on the basis of driving 5,000 miles a year, how much can she save by switching to electric?
Starting with the Kia Niro 1.6 diesel, Sue has a BIK tax rate of £108.12, compared with just £5.47 for the Kia Niro EV. The gross salary sacrifice is a touch higher for the EV (£392.98 compared to £381.50) but the net cost including BIK is where you see the true savings: £367.54 for the diesel Kia and £272.69 for the electric Kia.
The Kia Niro EV has a range of 250 miles on a full charge and won the What Car? Overall Car of the Year Award when it was launched, the first electric car ever to do so. Remember you’ll escape the congestion charge if you take it to London and benefit from various parking perks in other UK cities. It’s a groundbreaking EV that gives range, comfort and reliability.
Head to head against its traditional counterpart, Sue gains all the practicality she needs and makes substantial savings from the Benefit in Kind car rates.
Whether your circumstances are similar to Sue’s, or whether you are after a different type of company car altogether, it’s always worth comparing traditional to electric. The gap in performance between petrol or diesel and electric has narrowed significantly in recent years. This, together with improvements in range, increases in charging points nationwide, and greater choice in electric and hybrid cars, means there’s little compromise and a whole lot of money to save.
As lockdown eases and we begin to travel again, many people are asking us about more cost-effective company cars, how to maximise their Benefit in Kind tax savings and what the best electric car choices are. As industry experts, we are always happy to help people make the right decision for their situation.