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Changes to Benefit-in-Kind (BiK) coming from April 2020

Save money ahead of the April 2020 Benefit-in-Kind (BiK) increase

If you drive a company car, you will be liable to pay a company car tax called Benefit-in-Kind (BiK). BiK rates are increasing for many cars since 6th April 2020. Find out the reasons for these changes and how company cars drivers could save money on certain models if registered before 6th April.

What is Benefit-in-Kind (BiK)?

Whenever a company provides an employee with a non-cash benefit – such as private medical cover or a company car that is available for private use – HMRC deems this to be the supply of a benefit, and the employee is liable for a tax charge. The tax charge is known as the Benefit-in-Kind (BiK). BiK is calculated for company cars based on P11D value (the car's list price including optional extras, VAT, and delivery charges, minus the first year registration fee and annual VED car tax) the CO2 emissions of the car, and the driver's income tax band.

To work out the BiK tax due, the P11D value of the car is multiplied by the percentage banding the car sits in (based on CO2 emissions) and then the income tax banding of the driver (20%, 40%, or 45%). This gives an annual figure.

What are the Benefit-in-Kind (BiK) changes?

A new method of testing a vehicle's CO2 emissions and fuel consumption figure, known as the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), has been introduced. This replaces the New European Driving Cycle test (NEDC) which had become outdated and often understated CO2 emissions and overstated fuel efficiency. Using WLTP provides a more realistic evaluation of your vehicle's official fuel consumption (mpg), driving range, and CO2 emissions (g/km).

As a result, official CO2 emission figures for many vehicles will increase, placing them in a higher BiK tax band to the current rate and also causing an increase in the cost of car tax for the first year. 

We have a wide range of new models in stock and available for delivery before the BiK tax increase. To find out the savings you could make by purchasing a new car before April 2020 please call us on 01202 983727.

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Ocean Automotive Limited is an Appointed Representative of Automotive Compliance Ltd, who is authorised and regulated by the Financial Conduct Authority (FCA No 497010). Automotive Compliance Ltd’s permissions as a Principal Firm allows Ocean Automotive Limited to act as a credit broker, not as a lender, for the introduction to a limited number of lenders and to act as an agent on behalf of the insurer for insurance distribution activities only.

We can introduce you to a selected panel of lenders, which includes Volkswagen Financial Services. An introduction to a lender does not amount to independent financial advice and we act as their agent for this introduction. Our approach is to introduce you first to Volkswagen Financial Services who are usually able to offer the best available package for you, taking into account both interest rates and other contributions. If they are unable to make you an offer of finance, we then seek to introduce you to whichever of the other lenders on our panel is able to be make the next best offer of finance for you. Our aim is to secure the best deal you are eligible for from our panel of lenders. Lenders may pay a fixed commission to us for introducing you to them, calculated by reference to the vehicle model or amount you borrow. Different lenders may pay different commissions for such introductions, and Volkswagen Financial Services also provide preferential rates to us for the funding of our vehicle stock and also provide financial support for our training and marketing. But any such amounts they and other lenders pay us will not affect the amounts you pay under your finance agreement, all of which are set by the lender concerned. If you ask us what the amount of commission is, we will tell you in good time before the Finance agreement is executed. All finance applications are subject to status, terms and conditions apply, UK residents only, 18’s or over. Guarantees may be required.

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