The short answer
Electric company cars are often explored because they currently attract lower benefit in kind percentages than most petrol or diesel cars. That is only one factor. Range, charging access, residual value uncertainty, insurance and the chosen finance structure all affect whether an EV suits you and your business.
Benefit in kind and emissions
Company car tax is based on the list price and a percentage set by CO2 emissions and, for some hybrids, electric range. Zero-emission cars sit in the lowest band, but rates are set by HMRC and change over time. Check the current tables on GOV.UK rather than relying on historic figures.
Charging and running costs
Workplace charging, home charging and public charging are treated differently for tax and expenses. If the company pays for a home charger or home electricity, ask your accountant how that is treated.
Finance route choices
Contract hire can shift residual value risk to the funder, which some directors value when technology and used EV prices move quickly. Hire purchase gives a route to ownership but leaves the business holding the residual risk.
- Check the mileage allowance and excess mileage charges on any hire agreement.
- Ask about battery warranty terms and fair wear and tear standards.
- Consider how long you want the car; shorter terms may suit fast-changing technology.
Limitations and eligibility
- Benefit in kind rates are set by government and can change for future tax years.
- Funders apply their own criteria, and some may have different appetite for certain EV models.
- We cannot confirm tax savings; your accountant should model your position.
Map out your options in five steps
Educational comparison, no obligation to enquire.
Frequently asked questions
Is an electric company car tax free?+
No. Zero-emission cars currently attract a low benefit in kind percentage, but it is not zero, and the percentage is set to change in future years. Check GOV.UK for current rates.
Can the company pay for my home charger?+
It may be possible, but the tax treatment depends on the arrangement. Ask your accountant before committing.
Are plug-in hybrids treated the same as EVs?+
No. Hybrids are assessed on CO2 emissions and electric range, so the percentage is usually higher than for a fully electric car.
Related reading
Sources
- GOV.UK: Tax on company cars
- GOV.UK: Expenses and benefits: company cars
- GOV.UK: Capital allowances on business cars
This guide is general information and not tax, legal or accounting advice. Sorbus Finance is a credit broker, not a lender. Finance is subject to status and lender criteria. Review your position with your accountant.