Benefit in Kind Electric Cars 2021/22 HMRC: Tax Savvy Guide
Electric cars are becoming more popular. Many people want to know about the benefits of driving them. In the UK, there are rules about how much tax you pay for these cars. This is called “Benefit in Kind” or BIK. In this article, we will look at BIK for electric cars in 2021 and 2022. We will explain what it is, how it works, and its benefits.
What is Benefit in Kind (BIK)?
Benefit in Kind is a tax you pay on company cars. If your employer gives you a car, you may have to pay tax. This tax is based on the car’s value and its emissions. The less pollution a car makes, the lower the tax. Electric cars produce no emissions. This makes them an attractive option for many drivers.
BIK Rates for Electric Cars in 2021/22
The BIK rates for electric cars are low. In 2021/22, the BIK rate is only 1%. In 2022/23, it will rise to 2%. This is very low compared to petrol or diesel cars. For example, a petrol car could have a BIK rate of 20% or more. This means you pay much less tax for electric cars.
Why Choose Electric Cars?
There are many reasons to choose electric cars. Here are some of the main benefits:
- Lower Tax: As mentioned, electric cars have low BIK rates.
- Environmentally Friendly: They produce no emissions.
- Fuel Savings: Electricity is cheaper than petrol or diesel.
- Government Incentives: There are many grants and help for electric car buyers.
- Quiet Driving: Electric cars are very quiet. This makes for a peaceful drive.
How is BIK Calculated?
BIK is calculated using a formula. This formula takes into account several factors:
- Car’s Value: The market value of the car.
- CO2 Emissions: The amount of CO2 the car emits.
- BIK Rate: The percentage set by HMRC.
For example, if your electric car is worth £30,000, the BIK calculation would look like this:
£30,000 x 1% = £300. This is the taxable amount.
What Does This Mean for You?
If you drive an electric car from your employer, you save money. You pay less tax than if you drove a petrol car. This means more money in your pocket. For many people, this is a good reason to switch to an electric car.
Other Benefits of Electric Cars
Besides BIK savings, electric cars offer other benefits:
- Lower Maintenance Costs: Electric cars have fewer moving parts.
- Home Charging: You can charge your car at home.
- Tax Relief: You may get tax relief for charging costs.
- Access to Low Emission Zones: Many cities have low emission zones.
Frequently Asked Questions
What Are Benefit In Kind (bik) Rates For Electric Cars?
BiK rates are taxes on company cars. They depend on the car’s value and emissions.
How Is Bik Calculated For Electric Cars?
BiK is calculated based on the car’s list price and its CO2 emissions. Lower emissions mean lower tax.
What Is The Bik Rate For Electric Cars In 2021/22?
For 2021/22, electric cars have a BiK rate of 1%. This is a low tax rate.
Are Electric Cars Cheaper Due To Bik Rates?
Yes, electric cars are often cheaper to run. The lower BiK rate reduces overall costs.
Conclusion
In 2021/22, Benefit in Kind rates for electric cars are very low. This makes them a smart choice for many drivers. With low BIK rates, tax savings, and many other benefits, electric cars are more attractive than ever. If you are thinking about a new car, consider an electric vehicle. It can save you money and help the planet.
FAQs
1. What Is The Bik Rate For Electric Cars?
The BIK rate for electric cars in 2021/22 is 1%.
2. Will The Bik Rate Go Up?
Yes, it will rise to 2% in 2022/23.
3. How Is Bik Calculated?
BIK is calculated using the car’s value and emissions.
4. Are Electric Cars Cheaper To Run?
Yes, electricity is cheaper than petrol or diesel.
5. Do Electric Cars Have Fewer Maintenance Costs?
Yes, they have fewer moving parts, which means less maintenance.
Final Thoughts
Choosing an electric car is a wise decision. With lower BIK rates, you can save money. You will also be helping the environment. Think about switching to an electric vehicle today!
