We examined the changes in the 2020 Budget and how these may affect you and your business.
The 2020 Budget heralded some significant changes for company car drivers, including some very attractive incentives to go electric. To help you navigate through the changes, we have identified below key elements and summarized how you could benefit from them to reduce your running costs.
Plug-in Car Grant Extended
The Plug-in Car Grant has been extended to 2022-23 thanks to a £403m investment. The grant takes £3,000 off the price of any new electric car that costs less than £50,000 – so the grant is applicable to Kia’s fully electric e-Niro and All-New Soul EV, for example. Your Kia Dealer can apply for the grant on your behalf and the amount will be removed from the list price.
Improvements to Electric Car Charging Infrastructure
The number of charging points in the UK has been increasing rapidly, and the government is planning to improve the charging infrastructure further with an investment of £500m over the next five years. The plan is to ensure that drivers are never further than 30 miles from a rapid charging station. That’s ideal, when you consider that Kia’s e-Niro and Soul EV can travel around 280 miles on a single charge.
Fuel Duty Frozen
Fuel duty has been frozen for a further year, delaying the scheduled two-pence-per-litre rise. Good news for fleet and company car drivers trying to keep running costs down.
Favourable Capital Allowances for Electric Vehicles
The First Year Allowances (FYAs) for low CO2 cars have been extended to April 2025. For 2020-2021 the threshold for FYAs remains at 50g/km, which means our fully electric models – All-New Soul EV and e-Niro – and our plug-in hybrids – All-New XCeed PHEV, Ceed Sportswagon PHEV and Niro PHEV – are all eligible to be fully deducted from your profits before tax. The self-charging hybrid models are eligible for Write Down Allowances (WDAs) of 18%.
From 2021, the threshold will be lowered to 0g/km for FYA, so our fully electric cars will still be eligible for a full deduction. The threshold for Write Down Allowances will also drop in 2021 to 50g/km, which means our plug-in hybrid models will be eligible for the Main Pool rate of 18%.
BIK Tax and VED
The BIK tax rates that were published last year have been confirmed. This means huge savings for fully electric and plug-in hybrid models.
From 6 April, fully electric cars will incur 0% in 2020-2021, 1% in 2021-2022 and 2% in 2022-2023. The rate will be frozen at 2022-2023 levels for a further two years – that could lead to savings of several thousands of pounds over a three-year cycle for an electric vehicle vs. a petrol or diesel equivalent.
Plug-in hybrids with an electric range between 30-39 miles – such as the All-New XCeed PHEV, Ceed Sportswagon PHEV and Niro PHEVs – will incur BIK rates of 12% in 2020-2021, 13% in 2021-2022 and 14% in 2022-2023 – that’s less than half the rate of a regular petrol or diesel car that emits just 100g/km.
All fully electric cars are now exempt from VED. For vehicles less than £40,000, the standard annual rate is £150 for non-hybrid, and £140 for hybrid and plug-in hybrid.