New EV incentives revive demand for company cars in the UK
Renewed company car tax incentives for vehicles with CO2 emissions of 50g/km or less appear to be stimulating the market. Electric cars are taxed at 2% of their list price until April 2025, compared with 25% or more for most petrol or diesel cars, and that offers significant savings for drivers.
The changes have also helped revive the popularity of salary sacrifice schemes, which use the same bands. According to the British Vehicle Rental and Leasing Association , more than three-quarters of salary sacrifice orders were electric during the fourth quarter of 2021. Fleets now operate over half of all electric cars, reversing demand that had stagnated due to waning incentives during previous years. Company car tax for electric cars increased from 0% in the 2014/15 tax year to 16% in 2019/20, falling in line with plug-in hybrids and offering limited incentives for drivers.
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