A parked red VW ID.4 with a man walking towards it

Electric company car benefits add up

Why choose an electric company car?

Electric vehicles (EVs) are growing in popularity and there are many reasons to choose one as your next company car.

Along with offering you the opportunity to reduce emissions and achieve your personal environmental goals, EVs can be cost-effective too.

Read on to find out why many employees are choosing to drive an electric company car – from the potential tax savings to more accessible charging.

An ID.7 Tourer parked by the sea

Attractive Benefit-in-Kind (BiK) on EVs

EVs qualify for low BiK – also known as company car tax. Set at just 2% in 2024/25, BiK for zero tailpipe emission cars, like EVs, will remain attractive until 2029/30 at least. This means you’ll pay minimal company car tax on your EV, further strengthening their appeal.

While BiK for EVs is set to increase in the coming years, it remains significantly lower than petrol- and diesel-powered vehicles and plug-in hybrid powertrains.

BiK for zero tailpipe emission cars

  • 2024/25: 2%
  • 2025/26: 3%
  • 2026/27: 4%
  • 2027/28: 5%
  • 2028/29: 7%
  • 2029/30: 9%
  • A parked ID.7 being charged

    Home charging grant

    The government is also making home charging more accessible to drivers which, in turn, is helping businesses switch to electric vehicles. Typically, charging at home is a more cost-effective way for employees to top up an EV and can lead to lower running costs.

    The Electric Vehicle Homecharge (EVHS) grantOpens an external link is one initiative in place to help renters and flat owners embrace electric driving. It provides a 75% contribution to the cost of one EV charger and its installation, up to a maximum of £350 (inc. VAT) and is available for those who qualify until 31st March 2025.

  • An ID.7 being charged on the road with a woman on her phone

    Workplace charging opportunities

    The government is also helping more businesses offer workplace charging to their employees – particularly useful if drivers don’t have access to a home charger.

    Through the Workplace Charging SchemeOpens an external link, via the Office of Low Emission Vehicles (OLEV), eligible businesses can reduce the cost of installation by claiming up to £500 per charge point on up to 20 chargers – a total grant of up to £10,000.

    This is another initiative that also incentivises more businesses to electrify their fleet of vehicles.

  • A red ID.5 GTX being charged with a woman walking towards it

    Is charging your car at work a Benefit-in-Kind (BiK)? 

    No. Electricity isn’t classed as a vehicle fuel by HMRC, which means using these charge points – whether for an electric company car or personal EV – won’t incur a BiK cost.

Reimbursing EV mileage

If you drive an electric company car for work purposes, the government recommends that your employer should reimburse you 7 pence per mile (ppm).

Advisory Fuel Rates (AFR) are the government’s recommended rates for reimbursing employees for business travel in a company car. They’re published quarterly and currently stand at 7ppm for EVs, between 13-24ppm for petrol vehicles and between 12-18ppm for diesel powertrains.

Enhanced capital allowance

Much of the above will stand out to drivers as well as fleet managers, but the fact that EVs qualify for Enhanced Capital Allowance is specific to fleet decision-makers and businesses.

It means businesses purchasing vehicles can offset 100% of the cost of a zero tailpipe emission vehicle against their tax in the first year. This initiative was recently extended by the government, to 31st March 2026 for Corporation Tax and 5th April for Income Tax.

Next steps

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