Full electric cars are exempt from Vehicle Excise Duty (VED), but you still have to pay Benefit-in-Kind (BiK) tax if you’re going to run one as a company car.
How much tax will I pay for an electric company car?
At the start of the 2020/21 tax period the government lowered the benefit-in-kind (BIK) tax rate for electric vehicles from 16% to 0%. So although an employer would still need to allow an employee enough budget to afford the contract hire or leasing rates, the driver would pay no BIK at all for the year.
Are electric cars P11D benefit?
Given company car tax is often hundreds of pounds a month, or even more, this means there are huge savings when you go electric. This year 2021/22, the electric vehicle company car tax rate has risen to 1% of an EV’s taxable list price. This is also known as the P11D value.
How does BiK work for electric cars?
This percentage is determined by the Government. In short, the more polluting the vehicle, the higher its BiK rate is. For all fully electric cars on sale, the BiK rate is 1% during the 2021/22 financial year. It’ll rise to 2% for 2022/23, remaining there during 2023/24 and 2024/25.
What cars have no company car tax?
Low tax company cars
- Jaguar I-Pace.
- Kia e-Niro.
- Hyundai Ioniq.
- Volvo S90.
- Toyota Prius.
- Suzuki Ignis.
- Ford Focus.
- Peugeot 108.
How does tax work on company cars?
How does company car tax work? If your employer offers you a car as part of your pay and benefits, then you must pay tax on it. Unless it is used exclusively for work purposes, HMRC sees the car as a benefit, so benefit-in-kind (BIK) tax has to be paid. The money will be taken from your pay packet each month.
How is company car tax calculated UK?
Understanding UK company car tax
Company car tax payable by an employee is based on the vehicle’s P11D value multiplied by the appropriate BIK rate (determined by the car’s CO2 and fuel type) and the employee’s income tax rate (basic rate of 20%, higher rate of 40% or additional rate of 45%).
Is insurance cheaper on electric cars?
Electric cars tend to cost more to insure than a comparable petrol or diesel. That’s because they have large batteries that are expensive to replace if the car is damaged.
Are electric cars BiK free?
You may have made an electric car available to your employee for private use during 2018. Where this occurred, no charge to BIK arises in respect of any use by your employee in 2018.
What is the company car tax on a Tesla?
Company Car Tax (Benefit in Kind)
For tax year 2021/22 the Benefit in Kind rate is 1%, in 2022/23 to 2%, in 2023/24 and 2024/25 the rate stays at 2%.
Do I have to pay tax on a company car if I don’t use it for personal use?
If you have a company car and you want to use it for making personal trips then yes, you do have to pay company car tax. Unfortunately, in the eyes of the HMRC, personal journeys include travelling to and from work.
Do companies pay tax on company cars?
Company car tax is a tax payable by any business (not just companies) who provide an employee with a car that is used for private as well as business usage. In this case, both the business and the employee will need to pay tax on it. ‘
Is it worth having a company car?
A company car can be great for those who commute lots of miles to benefit as the vehicle is paid for meaning you don’t have to worry about unexpected costs. Car allowance is less common but offers more flexibility as the money can be used to purchase a new set of wheels or pay its running costs.