EV company car tax: why it still beats petrol
Benefit-in-kind rates for electric cars remain far below combustion equivalents. For a company car driver it is usually the largest single saving available.
Verify before relying on this. Benefit-in-kind percentages are set years ahead and revised. Treat this as an explanation of how the charge works, and confirm the current rate for your tax year with HMRC or your payroll team.
For anyone offered a company car, the tax treatment of electric vehicles is usually the single largest financial factor in the decision — larger than fuel, insurance or servicing.
How the charge is calculated
taxable benefit = list price × BiK percentage
tax you pay = taxable benefit × your marginal rate
The BiK percentage is what differs. Electric cars have sat at a small fraction of the equivalent petrol or diesel figure, and although the rates rise gradually, the gap has remained substantial.
Why that matters so much
On a car with a meaningful list price, the difference between a low single-digit BiK percentage and a figure in the twenties or thirties is hundreds of pounds a month for a higher-rate taxpayer.
That is why company car fleets went electric considerably faster than private ownership did — the incentive is direct and it lands monthly.
Salary sacrifice
Separate from a traditional company car, and increasingly common. You give up gross salary in exchange for the car, so the cost comes out of pre-tax income.
Combined with low BiK, this frequently makes an electric car cheaper than running an older private car — which is a genuinely unusual outcome.
Ask your employer whether a scheme exists. Many do not advertise it well.
What to check
- The BiK percentage for your tax year, not the current one, if the car arrives later
- The full list price including options, which is what the charge is based on
- Whether a salary sacrifice scheme is available to you
- How charging is reimbursed — home charging treatment is an area worth confirming
- Early termination terms on salary sacrifice, which can be strict
Where it does not apply
None of this helps a private buyer. If you are buying with your own money, the relevant numbers are running costs and depreciation instead.
In pictures
Common questions
Does home charging for a company car count as a benefit?
Treatment of reimbursed home charging has changed and is an area to confirm with your employer or an adviser rather than assume.
About the author
ElectraMile EditorialEditorial desk
The ElectraMile editorial team covers charging, running costs and EV ownership for readers in the UK and US.
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Figures shown for United Kingdom in GBP. Switch market in the header to see local pricing and terminology.
