Company Car Tax Benefits for Electric Vehicles

How Can My Business Benefit from an Electric Vehicle

Savings to be made vary depending on the circumstances of your own business, but we’ve listed a few initiatives here that are sure to spark a few thoughts to consider:

Benefit in Kind

From 6 April 2020 to 5 April 2021, employees who use a company car for personal trips will benefit from 0% tax on the benefit in kind. This could be a major company car tax benefit directly for your employee.

Benefits in kind are benefits that an employee or director of a company that sits outside their regular salary. They can be referred to as perks of the job, but they are still taxable regularly.

Making Electric vehicles 0% taxable for the year could be a huge saving passed on to your employee.

Even if this benefit only has a few months left on it when your vehicle is ready to drive, from 6 April 2021, this rate only goes up to 1%.

Employees can also benefit further – as electricity is not classed as a road fuel, there is no fuel charge tax to pay meaning more net pay.

Benefits for employees are good for business. Motivated employees want to do the best for their company.

100% First Year Allowance

This is a big one for your company. For electric vehicles, the first-year allowance can be claimed by your business for up to 100% of the vehicle. This allowance is the same for electric vehicles that are new and for electric vehicles that are considered new but have been used (a registered vehicle used as a demo vehicle for example).

Making use of this could have a significant impact on your bottom line in the year allowed for. What’s even better, this allowance has been extended to March 2025 as you plan to grow your business and its vehicles.

Further business savings

It’s not just tax purposes that mean your business can save. Other grants are available to encourage businesses to invest in an electric vehicle future:

Plug-In Grant

For vehicles that cost under £50,000 as standard, your business can claim a grant of £3,000 from the Office for Low Emission Vehicles (OLEV). This is an excellent reward for going green.

Charging point grant

If you have electric vehicles at your business, you’re going to need charging points for them. As well as the Plug-In Grant, OLEV also offers grants towards the install of an electric vehicle charging point. A grant of £350 is available for each charging point and business can apply for up to 20 of them. That equates to a potential of £7,000 in grants for your business.