Martin Lewis gives money-saving advice on VED car tax
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The group’s new ‘Living with your Electric Vehicle’ report says drivers who make the switch to electric cars will enjoy “preferential” tax rates. They warn drivers can “save a significant amount” in Benefit-in-Kind (BiK) payments each year by making the switch.
BiK rates for electric vehicles were slashed from 16 percent to zero percent last year.
Rates are now slightly higher, but a lot cheaper than the charges offered to similar petrol and diesel machines.
The report said: “As well as the various grants and loans available, EVs attract preferential Benefit-in-Kind rates.
“In the 2021/22 financial year EVs are placed in the one percent Benefit-in-Kind tax bracket, while from 2022/23 through to 2024/25, EVs fall into the two percent bracket.
“By comparison, a driver of a relatively low-emission petrol or diesel car (for instance, one that emits 100g/km of CO2) will be put into the 25 percent bracket from 2022/23.
“The potential tax savings by switching to an EV are huge.
“Comparing its Model 3 EV against a BMW 320d which emits 124g/km of CO2, data from Kwik Car Cost has calculated a company car driver can save a significant amount in Benefit-in-Kind payments each year.”
According to Venson, 20 percent income taxpayers would be set back just £409 in BiK fees a year with a Tesla Model 3.
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However, this figure jumps to over £2,200 for owners of a combustion engine BMW 320d Saloon model.
Car leasing firm Arval UK said they had seen a 280 percent growth in demand since the new BiK rates were introduced.
They also confirmed their top 15 cars sourced by drivers were all-electric models since the updates.
The Government has also confirmed BiK rates would remain low for electric cars until March 2025.
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