Yesterday, Chancellor Jeremy Hunt presented his second Autumn Statement, but with a very different tone to the gloomy announcements made this time last year. The Chancellor announced initiatives with a massive focus on pushing growth in the economy. The main question you’ll all no doubt have is… “how does it affect me?”, let’s take a look…
Harnessing Hybrid Benefits for Company Car Drivers: Exploring Tax and BiK Implications
31 July 2023
Mark Friend
Ambitious Startups, Reducing Tax, Accounting & Compliance, Structuring a Business, Building a Business
As the auto industry continues its shift towards electric power, hybrids have become increasingly popular amongst company car drivers in the UK.
The driving factors behind this trend are multifaceted, extending beyond ecological benefits to include attractive tax implications and Benefit-in-Kind (BiK) advantages.
The Impact of BiK Rates
BiK rates are pivotal for company car drivers, with tax determined based on the car’s list price and CO2 emissions.
Hybrid vehicles often occupy a favourable position in this equation, courtesy of their lower emissions.
Additionally, the vehicle’s electric range is a crucial factor in BiK calculations, making hybrids with low CO2 emissions (below 50) and significant battery ranges particularly attractive.
Choosing a Hybrid Vehicle as your company car
TopGear recently published a list of the top 10 hybrids ranked by electric range, and the new Polestar hybrid stands out amongst its competitors.
With a battery range of 93 miles this puts the Polestar in the banding of 70 to 129 miles for battery range (the only car at the time of this article exceeding the BiK’s favourable 70-mile threshold) giving a BiK percentage of just 5% (fixed to the end of the tax year 2024/25).
It’s a compelling choice for company car drivers looking to minimise their tax obligations.
Unfortunately the Polestar is in short supply.
However, there are a good range of vehicles in the next banding down with a BiK percentage of 8%.
Finding the balance
Be careful however and seek professional advice when choosing your next company car as hybrids with poor CO2 emissions will generate significant taxable BiK.
Potential hybrid owners must also remember that whilst tax benefits are a key consideration, they are not the only factor that determines the overall value of a hybrid.
Aspects like charging infrastructure, energy tariffs, and the vehicle’s residual value also play a critical role in the total cost of ownership.
Hybrids, Sustainability and Savings
The UK tax system’s growing alignment with sustainability goals creates a strong incentive for company car drivers to switch to hybrids.
With extended battery ranges, such as that offered by the new Polestar hybrid, company car drivers can realise significant tax savings.
Nevertheless, consultation with a tax advisor is advised to ensure all factors are considered.
The road to complete electrification is unfolding, and hybrids are shaping up to be a vital pit stop in this transition.
Getting in touch with us
The above is just one example of the many ways we at Friend & Grant look to help our clients save tax as well as saving time and generating real personal and business wealth.
We have a whole catalogue of tax saving tips for clients.
To find out more please contact us to arrange your discovery meeting.
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Blogs related to Company Cars
Take a look at our other blogs on the topic of company cars
Time For A New Company Car? Why Not Make It An Electric Car?
The Mileage Rates for Electric or Hybrid Cars
The content in this blog is correct as at 28th July 2023 See terms and conditions.
