Electric Company Cars and Vans in 2026: Tax Reliefs and Benefits

Switching to an electric company car or van can still be highly tax efficient for businesses. The UK tax system continues to provide generous reliefs to encourage businesses to invest in zero-emission vehicles and charging infrastructure.

Here’s what businesses and company directors need to know about electric vehicle tax relief in 2026.

100% First-Year Allowance for Electric Cars

Companies can claim a 100% First-Year Allowance (FYA) when purchasing a new, fully electric car.

This means the entire cost of the vehicle can be deducted from taxable profits in the year of purchase, reducing your corporation tax bill.

Key conditions include:

• The vehicle must be new and unused
• It must be fully electric (zero CO₂ emissions)
• The allowance currently applies to purchases made before April 2026

Ex-demonstrator vehicles are often still treated as new for tax purposes, meaning they may still qualify.

Tax Relief for Electric Vehicle Charging Points

Businesses can also claim a 100% First-Year Allowance for the cost of:

• Purchasing electric vehicle charging points
• Installing charging infrastructure at business premises

This relief currently applies to charging equipment installed before April 2025, helping businesses reduce the upfront cost of supporting electric vehicles.

Benefit-in-Kind (BIK) Tax on Electric Company Cars

Electric company cars remain extremely tax efficient for employees and directors.

For 2025/26, the Benefit-in-Kind rate for fully electric cars is 3% of the vehicle’s list price, increasing gradually in future years.

This is significantly lower than petrol or diesel vehicles, which can attract BIK rates above 30% depending on emissions.

Because of this low rate, electric vehicles are often the most tax-efficient company cars available.

Business Mileage for Electric Cars

If an employee or director pays personally for electricity used to charge a company car, the company can reimburse them using HMRC’s Advisory Electricity Rate, which is currently 7p per mile for business travel.

This rate is reviewed regularly by HMRC.

Charging at Work

If a company pays for electricity to charge an electric company car at the workplace, there is no benefit-in-kind tax for the employee, even if the vehicle is used for private journeys.

This exemption helps businesses encourage employees to switch to electric vehicles.

Electric Vans and Tax Relief

Electric vans are also highly tax efficient.

Key benefits include:

• 100% capital allowances may be available under the Annual Investment Allowance
• Electric vans qualify as commercial vehicles
• The Benefit-in-Kind charge for private use of vans is significantly lower than cars

This makes electric vans particularly attractive for businesses that require commercial vehicles.

Government Grants for Electric Vehicles

Government grants for electric vehicles have changed in recent years. While some earlier purchase grants for electric cars have been phased out, support is still available in areas such as:

• Charging infrastructure
• Fleet electrification
• Commercial vehicle grants

Eligibility and funding schemes may vary depending on the vehicle type and installation.

Why Electric Vehicles Are Still Tax Efficient

Electric company vehicles remain one of the most tax-efficient investments because businesses can benefit from:

• 100% tax relief on purchase
• Low Benefit-in-Kind tax rates
• No fuel benefit charges when charging at work
• Potential savings on running costs

With corporation tax rates now reaching up to 25%, these deductions can produce significant tax savings.

Planning an Electric Vehicle Purchase

Before buying a company vehicle, it’s important to review:

• Whether the vehicle qualifies for First-Year Allowances
• The Benefit-in-Kind implications for directors or employees
• Available charging infrastructure reliefs
• The long-term tax impact

Proper planning ensures you maximise the available tax benefits.

Need Advice on Electric Vehicle Tax Relief?

At Merranti Accounting, we help businesses understand the tax implications of company vehicles and identify the most tax-efficient options.

We can help you:

• Determine whether an electric vehicle qualifies for capital allowances
• Calculate the tax savings from switching to electric
• Plan company vehicle purchases efficiently

Contact us today to ensure your business maximises the available tax reliefs.