Company EV Tax: How You Could Save Thousands

A company car is considered a benefit provided by your employer, and HMRC treats it as a taxable benefit.

This is known as the Benefit-in-Kind (BiK) tax. Rather than paying tax on the car itself, you’re taxed on the value of the benefit you receive from having a vehicle available for personal use.

The amount of company EV tax you pay depends on:

• The vehicle’s list price (known as the P11D value)
• Its Benefit-in-Kind percentage
• Your income tax band (20%, 40% or 45%)

The lower the vehicle’s BiK rate, the less company car tax you’ll pay.

Because electric cars produce zero tailpipe emissions, the government assigns them much lower BiK rates than petrol, diesel and even hybrid vehicles. Which means you pay considerably less in tax on a company EV.

How Benefit-in-Kind Tax Is Calculated

The basic formula looks like this:

P11D Value × BiK Rate = Taxable Benefit

Taxable Benefit × Income Tax Rate = Annual Company Car Tax

For example, if an electric car has a P11D value of £40,000 and a BiK rate of 3%, the taxable benefit would be £1,200.

A basic-rate taxpayer (20%) would pay: £1,200 × 20% = £240 per year

That’s just £20 per month in company car tax on EVs, which is significantly less than many equivalent petrol or diesel company cars.

The UK government gradually increases EV BiK rates each year, and HMRC has already confirmed the rates through to 2029/30.

Although these rates are increasing by 1% each year, they’re still far below the rates applied to most petrol and diesel vehicles, which can reach 37% depending on emissions.

H3: Will Company EV Tax Continue to Rise?

The government has confirmed a gradual increase in EV Benefit-in-Kind rates until at least 2030. However, even at 7%, electric vehicles remain heavily incentivised compared to traditional fuel-powered cars.

We can’t predict future company EV tax policy beyond the current roadmap, but we do know that electric company cars are expected to remain one of the most tax-efficient choices available for the foreseeable future.

Example: Higher-Rate Taxpayer (40%)

Even at a higher tax bracket, the monthly EV tax cost remains surprisingly low compared to petrol or diesel company cars with similar list prices.

Why P11D Value Matters

The P11D value is the vehicle’s list price, including VAT and factory-fitted options.

Two electric vehicles may have the same 4% Benefit-in-Kind rate, but the more expensive model will still result in a higher tax bill because the percentage is applied to a larger value.

That’s why it’s worth comparing both the purchase price and the tax implications when selecting a company car.

Ok, so how do the numbers for company EV tax compare to regular petrol and diesel alternatives?

The example below assumes a vehicle with a P11D value of £40,000 and a higher-rate taxpayer (40%).

A fully electric company car would save a higher-rate taxpayer £4488 per year compared to a similarly priced diesel vehicle. That difference is massive.

Beyond Company EV Tax Savings

The financial gains don’t stop with company EV tax. When you take the leap to an electric car, you also get:

• Lower fuel costs through home charging
• Reduced servicing requirements
• Less wear on braking systems thanks to regenerative braking
• Access to smart EV tariffs with cheaper overnight electricity rates
• Potential workplace charging facilities for free or slashed charging

Company car tax on EVs is just one part of the picture. And it’s hard to ignore the total cost savings of driving an electric company car.

Do You Need a Home EV Charger?

If your company has commercial EV chargers on site and offers free charging for employees, you might not need a home charger.

However, it’s a great long-term solution if you plan on sticking with electric cars long-term.

A professionally installed EV charger offers:

• Faster charging speeds
• Greater convenience
• Smart scheduling features
• Access to off-peak energy tariffs
• Better visibility of charging costs

Being able to fully charge your car overnight is beyond convenient when you travel for work or have a long commute.

If you’re driving a company electric car, a smart EV charger will help you get even more value from it.

Our Ohme smart chargers automatically schedule charging when electricity prices are at their lowest, helping you reduce your running costs without lifting a finger.

Whether you charge every day or just a few times a week, a home charger gives you the convenience of waking up to a fully charged car, ready for your commute.

Thinking about installing one? ProEV supplies and installs the latest Ohme smart chargers across the UK, with expert installation and friendly advice.