Benefit-in-Kind tax is a tax that applies to all company cars that are driven in the UK. As it varies from car to car, it is important to take it into account when choosing company cars and car leasing deals, as it will add to the cost of your vehicle.
Benefit-in-Kind makes use of different classifications in the form of letters to identify different types of cars and tax rates. Electric cars are grouped as E, diesels as D and other types as A.
How much will your company car cost?
The complete set of tax bands is available here http://www.hmrc.gov.uk/cars/rule-changes.htm . BIK can be calculated by finding the vehicles list price and CO2 emissions. Diesels carry a 3% surcharge but modern particulate filers are leading manufacturers to call for this to be scrapped.
You can reduce the rates of BIK by choosing greener cars which will qualify for much lower rates than their expensive, polluting counterparts.
The near future of BIK
Benefit-in-Kind tax will change in 2012/13. The classification for 15 per cent rate on emissions will lower from 125g/km to 120g/km and the ten per cent rate will apply to cars which emit 99g/km or less. Thereby putting demands on manufacturers to produce ever greener efficient cars.
In 2013/14 the most substantial change will be the ten per cent classification dropping, again, down from 99g/km to 75g/km.
Finding more eco friendly cars (latest blog) to reduce BIK is becoming more important than ever and should be taken into consideration when choosing company cars. At Carlease Uk we will spend time to guide you through your BIK and help you arrive at your ideal lease vehicle.