Go green and minimise your tax bill with electric company cars

Fuel tax

BIK tax is also charged on employer-provided fuel for private use. As electric cars don’t use fuel, there’s no fuel benefit charge at all. Better still, if you use your own electric cars you can utilise workplace charging stations without incurring a BIK tax charge, even where the vehicle is used for private use.

To illustrate, if your employer provided a petrol car in 2022/23, listed at £20,000 with CO2 emissions of (say) 120g/km, you would attract BIK tax of £5,800 and a fuel benefit charge of £7,337. An electric car with the same value would attract BIK tax of only £400, and no fuel benefit. A significant difference! 

What if you’re self-employed?

The tax favourable incentives of low emission cars have been in place for self-employed individuals for some years now. Currently, 100% first year allowances (FYAs) are available on brand new and unused low emission vehicles (with 0 CO2 emissions) purchased for business purposes, which effectively reduces your taxable profits by the cost of the car. If the vehicle does not produce zero emissions relief is given at 18% for CO2 emissions between 1 – 50g/km and at 6% for emissions above this limit. 

Why make the change now?

The decision to transition to electric cars is no longer just a matter of social responsibility. If you’re not ready just yet, as a potential BIK tax increase is not expected until the 2025/26 tax year, you have time to consider your options.

For specialist  personal tax advice tailored to your unique circumstances, please fill out the form below and one of our experts will be in touch  to discuss your requirements and how we can help.