Despite the potentially high personal tax charge, many employees still enjoy and prefer the convenience of being offered the use of a company car by their employer.
Those employers familiar with the benefit-in-kind tax rules will be aware the tax impact on the employee is much lower for those that choose lower emission cars.
On 6 April 2020, new benefit-in-kind percentage bands were introduced which took into account very low-emission cars and electric cars, favouring full electric cars more.
This is not the first time the Government has used tax policy to try to encourage more drivers to make the change to electric.
For five years from 6 April 2010, providing a zero-emission electric company car was tax-free to the employee but this failed to generate any big take-up, potentially due to the lack of car choice and supporting infrastructure.
Electric cars are, however, now becoming more mainstream. With more options on the market and with better infrastructure, they are now a much more viable option for an employer looking to provide an employee with a tax-efficient company car.
The past few years have also seen a significant increase in awareness of climate change among the general public and how individuals’ choices can contribute to a greener future.
Employers have also been taking this on board.