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Electric company cars could help employees with cost of living pressures, Arval says

Date: 29 June 2022   |   Author: Sean Keywood

The BIK tax saving associated with employees switching from petrol or diesel to electric company cars could help counteract cost of living pressures for them, according to leasing company Arval UK.

The firm's commercial director Joel Lund argued that for a 20% tax payer, the BIK saving tended to be worth £1,000-£2,000 a year.

He said: "Very low BIK, and the resultant lower tax deduction, has been a key factor in electric car adoption from the moment that it became available, but it has become even more decisive in the last few months. At a time when prices of ordinary goods and fuel are visibly rising by the month, a take home pay increase of this kind has genuine value.

"Of course, the savings don't just stop with tax. The cost of personal mileage for an EV driver is currently reduced compared to someone driving an internal combustion engine equivalent, which can easily run into hundreds of pounds every year for an average motorist.

"What we are seeing is both individual drivers and entire fleets, which may have been slow when it came to electrification, suddenly find impetus, which very much fits in with our stated corporate strategy of supporting our customers' transition to electrified vehicles as soon as possible. And by employers enabling more employees to access electric cars through salary sacrifice, it's also a more inclusive approach for all employees."

Lund added that Arval had been advising fleets to open up their choice lists when it came to EVs, so they could make the most of the available vehicle supply.

He said: "At the prestige end of the market, which may be reserved for directors or senior staff, manufacturers generally have been able to offer more EV choices, but in the lower grades, the selection of models has been relatively limited.

"But by relaxing choice lists, we are seeing some manufacturers make inroads into the fleet sector who have not necessarily been part of the core company car market in the past, but are now able to provide strong EV models with comparatively good supply."