Company Car Tax for Electric Cars: What You Need to Know
As businesses and employees increasingly transition to electric vehicles (EVs), understanding company car tax has never been more important. Benefit-in-Kind (BIK) rates, tax incentives, and government policies are all evolving, making EVs an attractive option for company car drivers. In this guide, we’ll explore everything you need to know about company car tax for electric cars in the UK and how it compares globally.
1. Why Choose an Electric Company Car?
Switching to an electric company car isn’t just about reducing tax—it’s also about sustainability, cost savings, and improving corporate social responsibility. EVs significantly lower running costs and reduce emissions, aligning with many companies' environmental goals.
Additionally, businesses looking to enhance their green credentials will find EVs a great way to demonstrate their commitment to sustainability, potentially attracting more customers and partners who prioritise eco-conscious operations.
2. What is a BIK Tax and How Does It Apply to EVs?
Benefit-in-Kind (BIK) tax applies to company cars used for personal journeys. The tax is calculated based on the vehicle’s CO2 emissions and its P11D value (list price including VAT but excluding first-year registration and road tax). Since electric vehicles produce zero emissions, they benefit from significantly lower BIK rates compared to petrol or diesel cars.
The current BIK rate for electric company cars is 2% and will remain at this rate until April 2025. From April 2025, this rate will increase by 1% each year until April 2028, reaching 5%.
3. The Latest Company Car Tax Rates for Electric Vehicles
The UK government has set out clear company car tax bands up until April 2028. Below is a breakdown of the tax rates:
While these gradual increases will affect company car users, EVs will still offer much lower tax costs compared to petrol or diesel vehicles, which can attract tax rates of up to 37%.
4. The US Market: How American Policies Affect UK EV Adoption
With a renewed focus on clean energy, the new US administration has introduced ambitious policies, including a $7.5 billion investment in EV infrastructure and tax incentives for electric vehicle adoption. These policies will likely accelerate innovation and drive down costs for EV technology globally, benefiting UK businesses and drivers.
As the US pushes forward with large-scale EV investments, UK businesses can expect more competitive pricing and improved battery technology in the coming years.
5. How Plug In Stations Supports Your Transition to Electric Company Cars
At Plug In Stations, we help businesses and employees make the switch to electric company cars with ease. Whether you're looking for home, workplace, or public EV charging solutions, we provide high-quality, cost-effective options to support your transition.
Our expert team can advise on the best EV chargers, help you navigate BIK tax benefits, and ensure your charging setup meets your business needs.
Got questions? Need EV charging solutions?
Get in touch with us today and let’s build a cleaner, more connected future together.
