What are the tax breaks for electric company cars?

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Fleets and businesses are liable for astir fractional of each caller car registrations successful the UK, and the authorities has 20 years utilizing institution car taxation to promote drivers to take vehicles with the lowest CO2 emissions.

Company car tax incentives person helped stimulate request for diesel and hybrid cars, but by acold the astir generous fiscal breaks are reserved for electrical vehicles and it’s proving influential. In fact, the SMMT says 2 thirds of 2022’s caller electrical cars were registered to fleets and businesses. Here’s however it works.

How overmuch taxation volition I wage for an electrical institution car?

Company cars are 1 of the astir desirable perks for employees, providing entree to a (usually) marque caller and afloat maintained conveyance that’s besides disposable extracurricular enactment hours. Unfortunately, this doesn’t travel for free. If you’re utilizing a company-owned car for backstage journeys past HMRC people it arsenic a Benefit-in-Kind (BiK), and you’ll beryllium taxed for doing so. 

Autocar's institution car taxation calculator shows precisely what you'll wage for each marque and model

Several factors impact the size of that taxation bill, but the biggest power is the car’s CO2 emissions. Company cars are taxed based connected what’s called a ‘taxable value’ – which is simply a percent of their database price, weighted against vehicles that emit the astir CO2 astatine the tailpipe. 

Although electrical vehicles person a higher database terms than their petrol oregon diesel counterparts, they are rated astatine 0g/km CO2 and autumn into a overmuch little taxation band.

Company car taxation bands are presently frozen until April 2025, which means drivers are taxed connected conscionable 2% of the database terms if they take an electrical vehicle. That compares to 25% oregon higher for adjacent the astir businesslike petrol, diesel oregon alleged ‘self-charging’ hybrid models. 

Although the taxation bands volition summation each April from 2025 onwards, successful enactment with the caller fiscal year, HM Treasury has confirmed that those incentives volition stay successful spot until astatine slightest 2028. 

The pursuing array shows immoderate examples, based connected the 2022-2025 taxation bands:

Vehicle Type P11d BIK rate Taxable value Peugeot e-208 Allure Premium+ Electric


2% £652 Peugeot 208 1.2 PureTech 100 Allure Premium+ Petrol £22,495 28% £6,299 BMW i4 eDrive40 M Sport Electric £57,630 2% £1,099 BMW 320d M Sport Auto Diesel £42,885 30% £12,866

Drivers’ yearly Benefit-in-Kind payments are a percent of the taxable value, which matches their income taxation rate. England, Wales and Northern Ireland usage 3 bands (20%, 40% and 45%), portion Scotland has 5 (between 19% and 46%). For example, a 20% payer would wage 20% of the taxable worth each year, divided arsenic crossed their payslips.