The taxable benefit for using an electric company car for private journeys is currently calculated at 2% of its list price. If you chose a hybrid company car, models that can drive at least 130 miles on electric power also currently carry a taxable benefit of just 2% of list price.
However, these benefit levels will rise by one percentage point each year from April 2025 until they reach 5% of list price in 2027/28.
Even at this level an electric or hybrid company car is a bargain, as the
company will cover the capital cost of the vehicle, the insurance and any repairs or servicing. Electric cars currently pay zero road tax (VED), but this will change from April 2025.
Driving an electric van can be beneficial, as there is currently zero taxable benefit for the driver! It has not yet been announced if this will remain the case from 2023/24.
Where a business buys a new electric car or van, it can claim 100% of the cost as a capital allowance in the year of purchase. For an electric car to qualify for this 100% First Year Allowance it must be acquired brand new (not second-hand) before 1 April 2025.
Companies that acquire brand new
vans can claim a super-deduction of 130% of the price, if the van is acquired before 1 April 2023 (although the 30% increment will be reduced where the accounting period straddles 1 April 2023).
Where the business installs electric vehicle charging points before 31 March 2025, it can claim 100% of the cost in the year of purchase.
Where employees are permitted
to freely charge up electric vehicles at work, there is no taxable benefit for the use of that electricity. Drivers of electric company cars who pay for their own charging can claim a tax-free allowance from their employer of 8p per business mile driven from 1 December 2022.
Drivers who use their own electric cars for business journeys can claim the normal mileage rates of 45p per mile for the first 10,000 miles and 25p for any additional business miles driven in the tax year.
We can advise you on the personal and business tax issues associated with all vehicles, whether electric or not.