With new rules that will see businesses choosing electric company cars under £40,000 exempt from benefit-in-kind (BiK) tax, there has been a call to back tax breaks with investment.
The UK government has the BiK taxation for the coming year and will increase it to just one per cent in 2021/22, in a bid to accelerate mainstream electrification, and aid efforts to meet climate change targets.
Tax on conventional company cars can be as high as 37 per cent, and the move is designed to incentivise drivers to switch to electric and low-emission vehicles, helping the UK achieve its Road to Zero targets.
As transport is the biggest contributor to the climate crisis in the UK, electric vehicles are critical in the drive to make large carbon savings and swap out fossil fuel alternatives.
British manufacturers will see the demand for electric vehicles – and the hugely valuable lithium-ion batteries that power them – surge and are calling on the government to stimulate this expanding market.
Kevin Brundish, CEO of electric vehicle battery manufacturer, AMTE Power, said that although the tax break will have a direct correlation in meeting climate change goals, to sustain this progress, the manufacturing sector must be supported to service the demand for lithium-ion batteries.
“Whilst the company car tax reward will be pivotal in the fight against climate change, more government action is needed to realise the benefits, and this lies in further infrastructure investment,” he said. “The UK has the knowledge and battery technology at home but will need the equivalent of a staggering eight 15GWh gigafactories by 2040 if the country is to meet its Road to Zero targets.”
“As the economy tries to stabilise itself after the disruption caused by the coronavirus, the creation of a more robust UK supply chain will allow manufacturers to keep pace with the expansion of this market and in turn develop more low carbon jobs of the future,” Mr Brundish concluded.