I am sure you are aware of what a company car is and how it can benefit you. But this guide will break down the options you have when owning a company car and whether electric is the way to go…

Types of electric cars

There are three different types of electric cars:

  • PEV / BEV (Battery Electric Vehicle). A Vehicle that purely runs on an electric battery which gives out zero emissions.
  • HEV (Hybrid Electric Vehicle). A Vehicle that runs on a petrol- or diesel-powered engine and also a small electric battery which usually has a range of only a few miles.
  • PHEV (Plug-in Hybrid Electric Vehicle). A Vehicle that has a large electric battery which needs to be charged from a source, but in turn has a higher range of up to 280 miles.


Benefits of having an electric car

Road Tax

Not only is it good for the environment it is also good for your bank account!

Owning a PEV / BEV means you do not have to pay any road tax (Vehicle Excise Duty) and for HEVs and PHEVs the road tax is likely to cost between £0 – £150 depending on Co2 emissions.

Capital Allowance Tax Relief

When buying an electric car, you can claim 100% of the cost of the vehicle to be offset against Corporation Tax or Income Tax in the year of the purchase.

You can also claim a 100% first year allowance for Charging-Ports, meaning that your business can pay for the installation of a charging port for your electric car at your house! But only up until the 31st March 2023 for corporation tax and the 5th April 2023 for income tax.

Running Costs

With the cost of fuel increasing weekly it is proving far more cost efficient to travel by green power (albeit electricity costs are also on the rise!)

Congestion Charges

The daily charge for driving within central London is now £15 per day, including weekends!  Where a car is pure electric or Co2 emissions less than 75g/km you  can receive a 100% congestion charge discount.

London’s Ultra Low Emission Zone

The ULEZ came into force a couple of years ago and requires drivers to pay a fee to drive within the zone.  Electric cars are exempt from this.


Company Car Tax – P11d Reporting

As you may be aware, a P11d is used to report to HMRC instances where employees (including directors) have received a personal benefit in kind, this includes company cars.

The employee then pays tax on the benefit in kind (BIK) value and the business pays Employer’s NIC.

Cars with petrol engines have a BIK rate, based on their Co2 emissions, this can be anything up to 37% of the value of the vehicle.

For diesel engines the BIK rate is as above, but with a 4% surcharge!

Hybrid cars have a lower BIK rate, depending on their mileage range.

Pure electric cars have a BIK rate of 2% (this was 0% for a few years but has recently increased and is set to hold at this rate until April 2025).

Here are some popular brand examples and their BIK rates:

37%  VW Golf GTI 2.0 TSI

31%  BMW 120d M Sport

12%  Toyota Prius Plug-in Hybrid

2%  Tesla, any model


So how much will a company car cost you in tax?

For an example on how to calculate the benefit in kind tax due on your car visit our online company car tax guide.

Simply take the value of your chosen vehicle, apply the BIK rate and use the formulas to calculate the potential Tax and Employer’s NI due.

For further information, or if you have any questions then do not hesitate to contact us:

  • 01737 652 852
  • info@a4cgroup.co.uk