Navigating Company Car Tax Implications for Electric Vehicles: A Comprehensive Guide
Are you considering getting an electric vehicle (EV) as a company car but unsure about the tax implications? Look no further, as we delve into the world of company car tax for EVs in this blog post.
Company cars are still a sought-after perk for many employees, and choosing an electric car as a company vehicle can have significant tax benefits. Let’s break it down for you.
### What is company car tax?
Company car tax, also known as Benefit in Kind tax, is the tax you pay on the value of the benefit of using a company car for personal as well as work purposes. The amount of tax you pay is based on the car’s value, CO2 emissions, and your income tax bracket.
The tax system aims to encourage employees to choose cars with low emissions, with electric cars being the most tax-efficient option due to their zero exhaust emissions.
### How does company car tax work for EVs?
For electric cars, the Benefit in Kind (BiK) rates are currently set at 2%, making them the most tax-efficient option for company cars. However, these rates are set to increase gradually over the next few years, but will still remain significantly lower than those for petrol or diesel cars.
To put it into perspective, if you have an electric company car with a value of £40,000, you would pay tax on 2% of that value, which amounts to £800. The actual tax you pay will depend on your income tax bracket.
### Company car tax comparison
Let’s compare the tax implications of an electric company car with a petrol model. For a £40,000 car, a 40% tax bracket employee would pay £320 a year for the electric car, compared to £4,960 a year for the petrol car. This highlights the substantial savings that can be made by opting for an electric company car.
### Other incentives for going electric
Apart from the tax benefits, there are several other incentives for businesses to switch to electric vehicles. These include grants for workplace charging points, reduced employer NICs, reduced car tax, and more favorable capital claim allowances.
### Are electric vans liable to company car tax?
The tax implications for electric vans differ based on their usage. While petrol or diesel vans may incur tax if used for personal purposes, electric vans are exempt from this tax, regardless of personal use.
### Do electric cars make good company cars?
From a taxation standpoint, electric cars make excellent company cars due to the significant tax savings they offer. However, companies need to consider factors such as the initial cost of the vehicle, charging infrastructure, and employee travel patterns before making the switch.
### Get your next electric car with carwow
If you’re considering purchasing an electric car, carwow is the perfect place to find the best deals. With a wide range of models and trusted dealers, you can easily find the perfect electric car for your needs.
In conclusion, electric vehicles offer substantial tax benefits for company car users, making them an attractive option for businesses looking to go green and save on tax expenses. If you’re considering making the switch to an electric company car, now is the perfect time to do so.