What can you save by going electric with Benefit in Kind?

Compare and calculate how much you could save

If your employer operates a car salary sacrifice scheme, you are probably aware that it can save you money. As a result, you may well be considering a company car. It’s also likely that you know enough about Benefit in Kind tax (BiK) to have understood the basic tax implications of a company car (if you aren’t sure about this, or would like a refresher, then Tusker has a handy comprehensive guide that will answer your questions).

But, even with all of that understood and out of the way, you may well still have questions on how to choose the best company car for your needs while still maximising your savings on BiK. Is now the time to embrace the future and choose an electric vehicle (EV), or is it better to dip a toe in the water with a hybrid, or to stick with a traditional petrol or model instead? With Benefit in Kind car rates now fixed until 2028 you can rest easy knowing that your costs will be fixed, whichever vehicle you choose, but a good first step is to calculate your BIK percentage band by using this table or this company car Benefit in Kind calculator. However, to help you see how Benefit in Kind tax works, and the huge differences between EVs, hybrids and petrol / diesel vehicles, we’ve developed this in depth comparison of the same car, as a hybrid, electric and diesel.

The net cost of BIK is where you see the true savings

The net cost including BIK is where you see the true savings: £441.40 for the diesel Kia Niro and £360.13 for the e-Niro.

Let’s meet Anne. Earning £40,000 a year as a company administrator, Anne is 41 years old, lives in Chelmsford with her husband and two young children. She wants a roomy, reliable car for short journeys (taking the kids to after school activities, a weekly supermarket shop and visits to friends in the local area). The Kia Niro is an ideal choice for Anne but, on the basis of driving 5,000 miles a year, how much can she save by switching to electric?

Starting with the Niro 1.2 diesel, Anne has a BIK tax rate of £124.44, compared with just £12.42 for the electric model. The gross salary sacrifice is higher for the EV (£482.92 compared to £459.48) but the net cost including BIK is where Anne will see the major savings: £441.40 for the diesel Niro and £360.13 for the electric version.

If Anne decides that she wants the ability to drive an EV around town for local trips, but that she needs more range than the pure EV can give her for occasional long journeys, then she could choose the Niro Hybrid instead. If Anne chooses the plug-in hybrid, then she will pay £408.40 monthly which includes £47 BIK.

The Kia Niro EV has a range of 285 miles on a full charge, which means for most people, a full charge will only be needed every two-to-three weeks. As an added benefit, you do not need to pay the congestion charge if you take an EV to London, as well as enjoying cheaper parking across many UK cities. It’s a well-spec’d family EV that gives range, comfort and reliability.

When she compares it head to head against its fossil-fuelled equivalent, Anne gains all the practicality she needs and makes substantial savings from the Benefit in Kind car rates by choosing the EV.

It’s always worth comparing petrol and diesel to electric

Whether your circumstances are similar to Anne’s, or whether you are after a different type of company car altogether, it’s always worth comparing petrol or diesel to hybrid and electric. EVs are now usually as fast, or faster to drive than petrol or diesel engine versions and 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 working from home is coming to an end and many of us begin to travel more frequently again, Tusker is asked time and again about how to enjoy cost-effective company cars which will maximise Benefit in Kind tax savings and what the best electric car choices are. As industry experts, Tusker is always happy to help people make the right decision for their circumstances.

Login or Create Your Account to find out which company car will work best for you and the Benefit in Kind tax savings you can make.