What about the BIK for plug-in hybrids?
The rules around PHEVs are a bit more complicated, so the BMW online calculator is going to be really handy to help you work out the costs. The tax liability on these is worked out using the official emissions as P11D as usual, but the lowest rates are reserved for cars which can travel furthest on electric-only power. This can have a surprising effect on the sums. For example, a BMW X5 xDrive45e 3.0e PHEV has driving emissions of 27g/km and when fully charged can travel 54 miles on electric power*. This puts it in the 7% BIK band for the 2021/22 tax year, meaning a 40% taxpayer will be liable for just £155 per year. That’s less than most smaller, less impressive PHEVs.
Do I have to pay tax on my fuel too?
If your company is generous enough to pay for your fuel for commuting and personal mileage you will get taxed on this too, using a formula which is worked out using the cars emissions. If you are not doing many personal miles, it may not be worthwhile taking this benefit at all. However, there is no tax liability at all for plugging in your electric or hybrid car at work – just make sure you get permission first!
Am I better off taking a car allowance than a company car?
Car allowance payments became a popular alternative to company cars as they allowed people to make their own decisions about what car they want to drive. This might still make sense if you want to drive a higher-emissions car because, for example, you need a seven-seater for your family. However, if you can swap to an electric or efficient PHEV car it is going to be more tax effective than simply taking the company’s cash and sourcing a car yourself.
Will BIK rates for electric cars rise in the future?
We can’t gaze into a crystal ball or predict government policy, but the rates have been set until 2024/25 which gives some certainty. The BIK percentage for zero-emission electric cars has been pegged at a maximum of 2% until then at least and PHEV rates will not rise above their current levels.
*CO2 emissions figure (weighted) was obtained using a combination of battery power and fuel. These figures may not reflect real life driving results, which will depend upon a number of factors including, accessories fitted (post-registration), variations in weather, driving styles and vehicle load.
You could be better off taking a car rather than an allowance