{"id":248763,"date":"2025-05-20T08:25:19","date_gmt":"2025-05-20T08:25:19","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/company-car-tax-on-electric-cars-business\/"},"modified":"2025-05-20T08:25:19","modified_gmt":"2025-05-20T08:25:19","slug":"company-car-tax-on-electric-cars-business","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=248763","title":{"rendered":"Company Car Tax on Electric Cars | Business"},"content":{"rendered":"


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With electric vehicles (EVs) becoming more commonplace on UK roads, many business owners are exploring the benefits of adding them to their company fleets. Aside from their environmental advantages, EVs offer significant tax incentives compared to traditional petrol and diesel vehicles. Understanding how company car tax on electric cars works is key to making informed decisions and ensuring your business remains tax compliant.\u00a0<\/span><\/p>\n

In this blog, the experts at <\/span>Kirkwood Wilson<\/span><\/a> will explore key tax considerations, employer responsibilities, future planning, and how accountants can support your journey into electric company vehicles.<\/span><\/p>\n

What is Company Car Tax and How Does it Work for Electric Vehicles?<\/span><\/h2>\n

Company car tax applies when a business provides an employee with a vehicle that is also available for personal use. This benefit is taxed through what is known as a Benefit-in-Kind (BiK). The BiK amount is calculated based on the vehicle\u2019s value (P11D value), CO2 emissions, and the fuel type.<\/span><\/p>\n

Electric vehicles have much lower BiK rates than internal combustion engine cars. For the 2025\/26 tax year, the BiK rate for fully electric vehicles is just 3%. Even though this is set to rise gradually in the coming years, it still presents considerable savings for businesses and employees alike.<\/span><\/p>\n

By choosing EVs for your company fleet, you can significantly reduce your tax liability while also contributing to your business\u2019s sustainability goals.\u00a0<\/span><\/p>\n

Employer Responsibilities: Reporting and Payrolling Benefits<\/span><\/h2>\n

Employers are responsible for informing HMRC about any benefits in kind provided to employees, including company cars. One of the most efficient ways to do this is through <\/span>payroll accounting<\/span><\/a>, a process known as payrolling benefits.<\/span><\/p>\n

Payrolling allows benefits to be taxed through the monthly payroll, meaning employees pay the correct tax as they go, and employers benefit from reduced end-of-year administration. It\u2019s important to ensure the correct <\/span>tax codes <\/span><\/a>are used to avoid discrepancies in tax payments.<\/span><\/p>\n

Whether you\u2019re just starting out with EVs or managing an established fleet, accurate and timely reporting is essential to remain HMRC-compliant.<\/span><\/p>\n

How Accountants Can Support You with Company Car Tax<\/span><\/h2>\n

Navigating the specifics of company car tax on electric cars can be complex, but professional support can make the process seamless. Here are several ways an accountancy firm, such as our expert team at <\/span>Kirkwood Wilson<\/span><\/a>, can help:<\/span><\/p>\n