Business motorists are eagerly looking forward to changes in Benefit in Kind (BiK) tax that will come into effect in April 2020. The changes, which were announced by the government earlier in 2019, will provide the chance for those motorists choosing an electric vehicle to benefit from no Benefit in Kind tax to be paid in 2020/21 financial year. And, with the Toyota vehicle lineup among the very best for developing electric and hybrid vehicles, taking advantage of the models from Hodgson Toyota is a great way to reduce your tax bill.
Benefit in Kind is essentially a non-salaried benefit provided by your employer, such as the use of a company car. Since this is not part of your salary, the way in which the benefit is taxed by HMRC is different and known as the Benefit in Kind tax. Such a value is calculated over the course of a year and divided into 12 monthly payments subtracted from your wages.
For BiK tax for a company car, a number of factors are taken into the calculation, most notably the fuel type, purchase price, and CO2 emissions. As you might expect, the greater the purchase price and the CO2 emissions, the greater the amount of tax you will be paying.
At present, vehicles in the Toyota lineup represent the perfect choice for business motorists wanting to save on their transportation tax, with the range of engines emitting low levels of CO2. Take, for example, a number of models in the current lineup. The smallest vehicle - the Toyota AYGO - emits just 92g/km of CO2 which, for a 20% income tax payer will cost just £419 per year in tax. Alternatively, the Yaris Hybrid emits 84g/km but costs just £725 annually.
With the new changes, however, even these affordable levels can be beaten. Anyone choosing a fully electric vehicle will have zero tax to pay in 2020/21, followed by just 1% in 2021/22, and 2% in 2022/23. For those choosing a hybrid or low emissions model - such as those found in the Toyota lineup - there will be added opportunities to save. For example, models emitting up to 50g/km of CO2 but which can travel more than 130 miles on electric only will be subject to just 2% BiK liability.
With the new tax rates coming into effect in April 2020, now is the time to begin your search for the ideal models for your commercial needs. At Hodgson Toyota in Newcastle and Gateshead, our team of business experts will be delighted to answer any questions you may have and help calculate any potential tax costs.