Tesla Model 3 (RWD Auto)	Electric	From £14	£172	From £28	£344
Kia eNiro (64kWh 2 201bhp Auto)	Electric	From £12	£147	From £24	£294
Skoda Superb iV	Hybrid (Petrol/Electric)	From £153	£906	From £306	£1,811
BMW 3 Series 330e (Sport)	Hybrid (Petrol/Electric)	From £93	£1,077	From £186	£2,154
Mercedes C Class	Hybrid (Petrol/Electric)	From £65	£487	From £130	£974

It’s essential to note that petrol-electric hybrids are taxed similarly to traditional petrol cars after considering their electric mileage range. Let’s explore the tax rates and provide practical examples:

Benefits of Using Electric Vehicles in a Limited Company

Key Points	UK Government Initiatives
Tax rates for company cars	Lower tax rates for electric vehicles
Current tax year	2%
Tax rates until 2024/25 tax year	2%
Tax rates for petrol and diesel cars	30% or more
Tax advantages of electric vehicles	Significant savings

The Long Range Version has a 421mi Range (WLTP), which should translate into real-world figures well into the 300’s. And a 15-minute charge gives back 175 of range, making it a solid choice. See our review here.

How to calculate your company car Tax Cost

We’ve included the tables below to display the tax rates for the 2023/24 tax year, allowing us to explain how to calculate the tax for a company car. You can access the complete list on the HMRC website.

Company Car Tax Rates for 2023/24

Vehicle Type	CO2 Emissions (g/km)	Electric Mileage Range (miles)	Percentage Multiplier
Electric	0	–	2%
Hybrid	1 to 50	130 and above	2%
Hybrid	70 – 129	–	5%
Hybrid	40 – 69	–	8%
Hybrid	30 – 39	–	12%
Hybrid	Less than 30	–	14%

Petrol Vehicle Company Car Tax Rates
This isn’t a complete list, but a full list of rates is available on the HMRC guidance page.

Engine Type	CO2 Emissions (g/km)	Electric Mileage Range (miles)	Percentage Multiplier
Petrol	100 to 104	–	25%
Petrol	105 to 109	–	26%
Petrol	110 to 114	–	27%
Petrol	115 to 119	–	28%
Petrol	120 to 124	–	29%

How to Calculate Employee and Employer Tax and NI for Company Cars
Let’s delve into how different CO2 emissions affect taxes, comparing examples of petrol, hybrid, and fully electric vehicles.

It’s important to remember that both employees and employers are liable for tax and National Insurance Contributions (NICs) on benefits they receive, such as company cars.

Our table below illustrates how to calculate these contributions, offering insights into what this means for your business, especially if you’re a company director.

Calculation Step	Petrol	Hybrid	Fully Electric
Example Vehicle	Volkswagen Golf 1.5 TSI	Volkswagen 1.4 TSI eHybrid	Mini Hatchback Electric 135kW
List Price	£24,740	£33,585	£28,445
Electric Mileage Range	–	38 miles	140 miles
CO2 Emissions	122g/km	21g/km	–
Tax Percentage Rate based on Emissions	29%	12%	2%
P11D Value (BiK)	£24,740 x 29% = £7,174	£33,585 x 12% = £4,030	£28,445 x 2% = £568
Employee Tax Amount	£7,174 x 40% = £2,869	£4,030 x 40% = £1,612	£568 x 40% = £227
Employer NI Payment	£7,174 x 13.8% = £990	£4,030 x 13.8% = £556	£568 x 13.8% = £78
Total for Company Director	£990 + £2,869 = £3,859	£556 + £1,612 = £2,168	£78 + £227 = £305

Other Advantages of Electric Company Cars

Advantages	Description
Fuel Charges	No employee fuel benefit or Class 1A NI charge for employers due to electric vehicle usage.
Mileage Allowances	Electric cars have a lower Advisory Electricity Rate (AER), resulting in tax-free mileage claims.
Capital Allowances	Fully electric vehicles qualify for a 100% first-year allowance, reducing Corporation Tax.
Charging Points	Employers can install charging facilities without a Benefit-in-Kind tax treatment.
VAT Implications	VAT treatment is standard; exceptions for VAT reclamation are limited to exclusive business use.

Are there any other advantages of providing electric company cars?

Fuel Charges

Electricity is not considered a ‘fuel’ like petrol or diesel, which means there’s no employee fuel benefit to be levied, and consequently, there’s no Class 1A NI charge for the employer.

Mileage Allowances

Mileage payments are based on a vehicle’s engine size and type. Fully electric cars, starting from September 1, 2023, are subject to the Advisory Electricity Rate (AER) of 10 pence per mile. For instance, an employee who travels 5,000 business miles in their fully electric company car can claim £500 in mileage, free from tax and National Insurance Contributions.

Capital Allowances and Company Cars

Companies can claim tax relief on fully electric vehicles with a 100% first-year allowance, reducing their Corporation Tax bill. However, leased and hybrid cars do not qualify for this allowance.

What About Providing Charging Points?

The government encourages electric vehicle adoption by allowing employers to install charging facilities without treating recharging as a Benefit-in-Kind. This means employees can recharge their vehicles at work “for free.” Employers can also choose to install charging points at an employee’s home, and this isn’t considered a Benefit-in-Kind either. However, the exemption doesn’t apply if the employer reimburses charging costs away from the workplace, like at a motorway service station.

How Should Companies Account for Electric Company Cars?

The accounting treatment for electric company cars is similar to that of any other vehicle the company provides. If a vehicle is purchased through a hire purchase scheme, the loan’s total amount should be reported on the balance sheet and reduced annually as repayments are made. The interest portion of the repayments is recorded as an expense in the profit and loss account.

If the car is leased with no option to purchase, it does not belong to the company, and you would receive a reduction in the expense payable against your corporation tax, rather than the allowances mentioned earlier.

Can I claim the VAT Back on an electric car?

From a VAT perspective, electric vehicles are treated like any other car by the government. This means you cannot reclaim VAT on the purchase of the vehicle, whether it’s petrol or electric. There is one exception: you can claim VAT back if the vehicle is exclusively for business use, with no private use. Proving this to HMRC can be challenging in practice. For instance, a car is considered 100% for business use if it remains at the business premises overnight and isn’t driven to your personal residence each day.

Which Electric Car Should I Choose?

The main basis of choice often centres on the range. Still, you should also factor in maintenance costs, such as if your employee can charge at home, you can provide a charging facility at the office and availability of charging points on the car’s usual journeys. Follow EVBuyer for our guide for every available Electric Car sold in the UK. Coming Soon.

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