Rapid rises in BIK would ‘damage’ battery electric company car take-up

The Government is being warned against hiking benefit-in-kind (BIK) tax in the Budget and instead ensure policies are aligned to continue the take-up of battery electric company cars.

Last month, the Prime Minister warned that the Government’s first Budget in October is going to be “painful”, with people having to accept “short-term pain for long-term good”.

Peter Golding, managing director at the fleet software specialist FleetCheck, says it would be premature for the Chancellor to assume that the market for fully electric company cars was now mature and more revenue could be clawed back.

“We currently have BIK tables though to 2027/28 and it would be fair to describe the rises they detail as careful,” he continued. “Rates are clearly being kept low to encourage further electric car adoption over time.

“What we don’t want to see is a sudden jump in future BIK because that would affect company car choices being made today, given typical replacement cycles.

“This could especially discourage electric car adoption at a point in time when there is already an underlying trend developing towards plug-in hybrids among some drivers.”

What had happened with electric company cars in the fleet market to date was effectively the gathering of low hanging fruit, he warned, and the next phase could be more difficult.

“It would be a mistake to look at the progress made in fleet car electrification to date and assume that the trend will continue at the same rate,” he explained.

“Drivers who haven’t chosen an electric car so far are those who, for example, have no drive on which to install a charger and therefore no easy access to low-cost charging.

“In order to bring those drivers on board, the Government needs to not just keep BIK low, but also ensure that AER rates match electricity prices effectively, and that the installation of on-street charging is properly funded. 

“Everything needs to be aligned and the signals in favour of EV adoption need to be clear in order for the market to continue to respond positively. We very much hope to see this happen on October 30.”

While it is calculated using a formula, Golding says that the recent reduction in advisory electricity rates (AER) was worrying, especially when the energy price cap is increasing.

“There’s always been a strong argument that AER rates are too low and reducing them further in this way sends out a potentially discouraging message to anyone thinking of choosing an electric company car,” he added. “Our hope is that it is not a sign of things to come.”