New car tax changes are ‘financial game-changer’ – drivers can save over £3,500 this year

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Car tax changes to scrap Benefit in Kind rates for electric vehicles from 16 percent to zero have led to a “huge boom” in demand for the new vehicles as interest has soared. Octopus Electric Vehicles says the number of drivers opting to lease electric vehicles have almost doubled in the first six months of the scheme.

Octopus says the new changes for those purchasing an electric vehicle under a salary sacrifice scheme has typically reduced monthly leasing payments by up to 40 percent.

This has helped drivers save an average of £2,589 per year while motorists on higher wages can save even more.

Those earning between £100,000 and £120,000 a year can save up to 60 percent on payments equivalent to a cost deduction of £3,711.

The new system has completely eliminated upfront costs for brand new electric models which have tackled one of the main hurdles among road users to switch – the hefty costs.

Benefit in Kind rates will rise to one percent next year and two percent in 2022 but this is still considerably lower than rates for traditional combustion vehicles.

Older petrol and diesel models are still subject to an average Benefit in Kind rates of 27 percent which can see costs drastically rise.

Ms Howarth said: “The Impact of the last six months has been staggering.

“Changes to Benefit in Kind tax have been a financial game-changer for EV leasing.

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“Add this to brilliant electric cars hitting the market and huge savings on running costs versus petrol cars, and EV’s are a total no brainer.

“It’s no wonder then that we are seeing a huge boom, with the number of companies ordering EVs via our salary sacrifice scheme growing five-fold since April.”

The new tax changes have seen luxurious models become available to the masses with higher rate taxpayers able to lease a Tesla Model 3 for 48 months for just £342 a month.

This cost also includes insurance, all servicing and maintenance and even tyre replacement in the event of damage.

In comparison, a similar Audi A4 model would cost almost £395 per month on a personal lease which would not include any extras.

Steve Smith took advantage of the Salary Sacrifice scheme to secure a Tesla Model 3 and claims he is paying “far less”.

He said: “I’ve long been interested in EVs, but only just convinced my boss about the Salary Sacrifice scheme, which has allowed me to buy a Tesla Model 3.

“The savings from the scheme and the zero percent tax mean the cost of my car and electricity is far less than I was paying for my old diesel car and fuel.

Lower rate taxpayers and families can secure a 245-mile range Renault ZOE for just £218 per month under the new scheme.

Poppy Welch, Head of Go Ultra Low claims there has “never been a better time to drive electric”.

She said: “Zero percent Benefit in Kind is just the latest in a host of benefits available to EV drivers.

“Not only does it complement the £3,000 Government plug-in car grant, the £350 Government home charging scheme, the exemption from Vehicle Excise Duty and London Congestion Charge.

“But it’s also enhanced by significant fuel, tax and maintenance savings.”

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