Electric Car Leasing Booms Amid Low BIK Tax Rates< Back to blog
Electric car leasing has almost doubled in the first six months since the UK government introduced a 0% BIK (Benefit in Kind) tax for all EVs, according to Octopus Electric Vehicles.
Total registrations of new electric cars this year has increased by 157% from 2019, something which EV leasing has contributed massively to. In the same breath there’s been a stark contrast in sales of combustion engine vehicles, that have slumped by an average of 52% during the same period.
How much can you save with electric car leasing?
Leasing an EV through a company salary sacrifice scheme previously required employees to pay BIK tax at a rate of 16% for zero-emissions models.
To put this into perspective, before the changes were made to the tax rates, a brand-new Nissan Leaf would cost those in the 20% tax bracket an average of £953.28 per year. Those in the higher 40% tax bracket would pay an average of £1,906.56.
Now this additional cost is no longer included within the monthly lease payments for an EV, resulting in a 30-40% decrease in the amount required for the vehicle instalments.
Cheaper running costs are also a deciding factor that has helped see a surge in interest of electric cars. For example, it costs around £4 to provide 100 miles of charge for an EV, whereas a tax fuel calculator shows that a fuel-efficient petrol car would be around £9.57.
What else has caused electric car leasing to increase?
The coronavirus pandemic has seen a massive drop-off of people using public transport, with National Rail reporting that trains are operating at just over 30% capacity compared to the numbers pre-covid.
As less and less people want to take buses, trains or the tube to work, there’s reasons to suggest that more cars will be on the roads as furlough schemes come to an end and people return to work.
Businesses and their employees also have a lot to gain from salary sacrifice schemes – in particular with EVs – that make it a sensible option for helping people get back to some sense of normality. Some of the benefits include:
- Reduced tax and National Insurance Contributions from employers.
- Improves company image (i.e. reduced carbon footprint, new cars for existing and future employees).
- Cheaper way to get a new car – you pay for the vehicle using your gross salary, which is cheaper than having to borrow money or paying cash for a new car.
- A new car, hassle-free – lease cars are brand-new, so you won’t need to worry about unexpected repairs as the car’s covered by the manufacturer warranty. Also, it’s possible that an employer could negotiate a favourable deal that includes maintenance and insurance for a handy all-in-one package.
Are you or your business interested in leasing an electric car? Check out Moneyshake electric car leasing for great prices on the latest EV models.
Do you want to find out more about the benefits of EV leasing? Head over to our handy guides to discover everything you need to know before choosing to lease an electric car.