There are many benefits to encouraging electric cars, including lower running costs, the environmental advantages and reduced noise pollution. There are also tax benefits to promote the purchase of electric vehicles.

We have listed some of these benefits below.

The benefit-in-kind (BIK) due on company cars can be significantly reduced. For example, most electric vehicles will incur a BIK rate of only 2% in 2022-23. Compare this with the benefit charge for a gas-guzzler pumping out 160 g/km or more CO2, which would be based on 37% of the list price when new. This means that company car drivers who switch to electric cars should see their tax bills significantly reduced. This also benefits employers who may see a significant decrease in Class 1A National Insurance charges.

Businesses purchasing electric cars can expect to recover more of their investment in direct tax relief. For example, businesses can write off 100% of the cost of an electric vehicle against the profits of the year of purchase, and there are no restrictions on the car’s value. However, the car must be new and unused to qualify for the 100% relief.

Companies can also benefit from the super-deduction, which offers a 130% first-year allowance on qualifying electric charging points for cars and vans. To be eligible for the relief, the company must use the charging point in their own business. This relief is available until 31 March 2023.

The road tax, or Vehicle Excise Duty (VED) rates for all fully electric vehicles, have been reduced to £0 until 2025. In addition, there are reduced VED rates for plug-in hybrid electric vehicles (PHEVs).

There is no benefit-in-kind charge for the private use of a company van if the private mileage is insignificant. There is no benefit-in-kind charge if the van is an electric vehicle, even if the private mileage is significant.

There are also other benefits, including an EV charge-point grant that provides funding of up to 75% towards the cost of installing electric vehicle smart charge-points, up to a maximum of £350 (including VAT) per household/eligible vehicle. Electric cars are also exempt from the London congestion charge when applying for a Cleaner Vehicle Discount.