The tax position of a director or employee with a fully electric company car is very generous! The taxable benefit currently is 2% x the list price of the car and this will remain at 2% up to 5th April 2025.
Example
George has an antiques business, Bourne Limited. He is a director of the company. Bourne Limited recently acquired a new Genesis electrified G80 fully electric company car. Let us assume that the list price is £65,800.
The company claimed 100% FYA capital allowances on the cost of the car. This is to be George’s company car.
George’s taxable benefit in kind is only £65,800 @ 2% = £1,316. He is a 40% taxpayer, so he only pays annual tax of £526 for the use of the car. This covers unlimited private use, insurance of the car for business and private use, repairs and the weekly valeting of the car.
Bourne Limited has installed an electric charger at the workplace and allows George to charge up his company car at work. They have also installed a charger at his home. He accurately works out the actual cost of charging the car at home, both for business and private mileage and his employer reimburses him. These are not additional taxable benefits in kind. All of this is within the taxable benefit for George of £1,316. They have also provided George with an electric car charge card, so that he can charge his car up on the go, at service stations, restaurant car parks, etc.
When you look at the whole package, George is getting a fantastic, very tax efficient company car deal! He also does not have to bear the depreciation on the car.
The benefit in kind rates relating to electric company cars for the next few fiscal years
| Year | Taxable Benefit |
| 2024/25 | 2% |
| 2025/26 | 3% |
| 2026/27 | 4% |
| 2027/28 | 5% |
Salary Sacrifice for electric company cars
Salary sacrifice arrangements provide a very tax and national insurance efficient way of providing electric company cars for employees and directors.
Our tax team here at Gravita can also assist you with remuneration planning on a wider scale, and other related areas, such as the use of Employee Ownership Trusts.
Written by Tim Palmer CTA ATT,
Gravita Tax Consultant
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