What Is BIK Tax?

The BIK tax, Benefit in kind for full has been in the news since the April budgets where announced last year. The changes where a while ago now but the basic outline was that the limit of a £80,000 cost of a company car had been removed which was the first thing to go; now there is constant updates for the tax. There is a change every year and we will run through the last few major changes for you.

So what is BIK Tax?
BIK tax is often referred to as company car tax and is paid in regards to every company car driven on the roads of the UK. The tax is designed to tax those who regularly use a company car, if the tax isn’t taken into account then it can be very expensive when the company car is being chosen. BIK uses different letters to determine tax amounts to do with fuel types eg E = Electric, D = Diesel, P = Petrol and any other cars are categorised as A.
BIK tax is calculated on a multitude of different things such as list price of car, type of fuel and CO2 emissions. The way it works is a percentage CO2 emission is calculated which is then multiplied by the price of the car; the end result means the more expensive the car the more will need to be paid in tax.
The idea of the tax is to get companies to use greener cars on their company vehicle fleets to reduce CO2 emissions which will ultimately save them money.

What changes are being made?

Currently
The threshold for 15% rate is to drop from 125kg/km to 120g/km and the threshold for 10% rate will only now apply to cars emitting less than 99g/km.

Current/2014
10% rate dropping from 99g/km to just 75g/km.

2015/2016
Electric car drivers will see the zero emission zero percent rate scrapped and electric cars will have to pay 9% rate.

Having worked in the car rental industry for over 15 years, he really knows his stuff. Rob heads up our marketing department and as a keen traveller, always has a new location to talk about. Particularly if there is a golf course nearby.