Are Electric Company cars tax-free?

Electric company cars are not completely tax-free, but they do offer significant tax advantages in the UK. One of the primary taxes associated with electric company cars is the Benefit in Kind (BIK) tax. Despite the significantly reduced BIK rate for electric vehicles – just 2% for the 2023/24 tax year – employees will still need to pay this tax.

Will government grant tax relief on battery storage systems?

In a much-needed move towards energy efficiency, the government has unveiled plans to grant tax relief on battery storage systems.

How much is company car tax?

It’s a lot to think about, but the general rule of thumb is that the more expensive a vehicle is, and the more CO2 it emits, the more you’ll have to pay in company car tax. Tax bands run from 2% to 37% for the current 2023-24 tax year. Slightly different rates apply depending on whether the car was registered before or after 6 April 2020.

Do you pay tax on a car if your company buys it?

If your company buys or rents a car and provides it to you, you might be looking at paying personal tax on it. This could be up to 37% of the LIST price of the vehicle, regardless of its age when you actually get use of it. This is because you have received a ‘benefit in kind’.

Do electric cars pay road tax?

Fully electric vehicles costing less than £40,000 are exempt from VED, also known as road tax. This exemption is set to last until 2025 after 2025 electric cars will pay road tax. Employees can benefit from an electric car salary sacrifice scheme, where they forgo a portion of their pre-tax salary to cover the cost of an electric company car.

What is the Bik tax rate for electric cars?

The BIK tax rate, which is the percentage of the car’s value that is taxable, is set to increase gradually each year from the tax year 2025/26 to 2027/28. This annual increment is fixed at 1%. Therefore, by the end of the tax year 2027/28, the BIK rate for electric vehicles will be 5%, a rise of 3% from the 2024/25 rate of 2%.