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Car tax changes: Experts reveal they are 'not worried' by 'negligible' tax rise this April

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Car tax changes will see an increase in Benefit in Kind rates on electric vehicles from zero percent to one percent. This means electric cars purchased through company car salary sacrifice schemes will cost drivers slightly more than their current levels.

However, the charges were slashed from 16 percent to zero in April 2020 so drivers will still make massive savings compared to previous years.

Fiona Howarth, CEO of Octopus Electric Vehicles confirmed drivers who switched to an electric car would still make savings despite the new update.

She added the money saved by drivers would “more than offset” any slight increase in BiK rates.

Speaking exclusively to Express.co.uk, she said: “I don’t think people will necessarily know that it was ever at 16 percent.

READ MORE: Car tax changes: UK urged to copy Romania’s fuel duty

Experts at PodPoint say the new changes could add over £100 to the price of tax charges over the course of one year.

A new Nissan Leaf with a value of £29,790 will have a benefit in kind value of £297.90 from 2021 – 2022.

This means drivers who earn up to 20 percent income tax could pay £59.58 per year in BiK charges on the car, equating to just under £5 per month.

Those who pay 40 percent income tax will face slightly higher charges with up to £119.16 per year spent on the benefit in kind charges.

“And actually when you looking at the monthly leasing, essentially the company car tax almost doubles the payment each month whereas for the Tesla Model 3 it’s a negligible increase.

“The Tesla Model 3 is slightly more expensive on the monthly rate for business leases, it’s just nothing compared to the Benefit in Kind.”

Benefit in Kind rates will increase to two percent from 2022 before rates are frozen for another two years.

Using the earlier Nissan Leaf example, PodPoint says this will increase Benefit in Kind rates to £595.80. 

Those who pay20 percent omcome tax could therefore pay £119.16 per year with those paying 40 percent tax charged up to £238.32. 



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