The amount of electric cars on the market is rapidly increasing along with the range they are capable of with a number of models capable of 200+ miles. For anyone with a company car or even running their own business through a limited company the tax savings available with electric cars should not be underestimated (these savings are not available for sole traders or partnerships but could be factored in when considering whether to incorporate the business).

A little bit of detail - employees provided with diesel or petrol cars are taxed on the list price of the car (including optional extras) based on the CO2 emissions. There are slightly different rates based on cars registered on or after 6th April 2020 and the sliding scale runs from 14/15% for cars with CO2 emissions as low as 51-54 grams of CO2 per kilometer all the way up to 37% for cars emitting CO2 at 170+ grams per kilometer. You can find your cars CO2 levels on the log book or by searching on the DVLA website.

Now lets get to the numbers

The taxable benefit is treated as income for the individual and taxed at their marginal rate of tax. To keep things simple we will see what the above cars would cost a basic rate and higher rate taxpayers

For a basic rate tax payer a saving of £1,704. For a higher rate tax payer a saving of £3,408.

If private fuel is provided for a petrol or diesel car the difference becomes even more significant. An additional benefit to having a company car is the maintenance costs and insurance can all be covered by the company.

This article has only considered the benefits from an employee perspective. The company will also see a great tax incentive to adopt electric vehicles.

If you would like to know more and discuss / plan how would could benefit by providing or receiving an electric company car please get in touch.