An increasing number of employers are considering providing fully electric cars to their directors/employees due to the favourable tax reliefs for the employer on the purchase of the vehicle and low benefit in kind tax (BiK) charges for the director/employee.
When an employee or director has a company car available for private use, they are taxed on this private use according to the value of the BiK. The BiK is calculated based on the manufacturer’s list price when new (even if the car is provided second hand); optional extras on the vehicle; whether the director/employee contributes monies to the purchase; CO2 omissions; and how the vehicle is powered.
Electric company cars offer substantial BiK tax savings compared to diesel and petrol vehicles. For fully electric cars, the BiK is just 2% of the manufacturer’s list price when new (adding to the list price the price of any optional extras) for tax years 2022-23 to 2024-25. This is compared to up to 37% for some petrol and diesel cars.
Also, if a brand new (not second hand) unused zero omission car is purchased before 31 March 2025 by the employer, the full cost of that vehicle can be claimed against the employer’s trading profits in the year of purchase, rather than tax relief for the vehicle being spread over many years (which is the case for diesel and petrol cars). There are also tax reliefs available for the employer if they install charging points at the director’s/employee’s home and the business premises.
For further information on providing electric cars to your directors/employees download our factsheet – this includes details on how to calculate the taxable BiK value; the tax relief on the purchase of zero omission cars by the employer; and BiK for electric company vans.
Tax and Electric Vehicles, Attleborough Office 