There are many reasons to encourage the use of electric cars such as lower running costs, environmental advantages and reduced noise pollution. There are also tax benefits.
The benefit-in-kind (BIK) due on company cars can be significantly reduced. This means that company car drivers who switch to an electric car should see their tax bill significantly reduced. This also benefits employers who may see a significant decrease in Class 1A National Insurance charges.
Businesses purchasing electric cars can expect to recover more of their investment in direct tax relief.
Companies can also benefit from the super-deduction, which offers 130% first-year allowance on qualifying electric charging points for cars and vans. To qualify for the relief the company must use the charging point in their own business. This relief is available until 31 March 2023.
The road tax, or Vehicle Excise Duty (VED) rates for all fully electric vehicles have been reduced to £0 until at least 2025.
There is no benefit-in-kind charge for the private use of a company van if the private mileage is insignificant.
There are also other benefits including an EV charge-point grant that provides funding of up to 75% towards the cost of installing electric vehicle smart charge-points, up to a maximum of £350 (including VAT) per household/eligible vehicle.
Electric cars are also exempt from the London congestion charge when applying for a Cleaner Vehicle Discount.
*All the above information provided by HM Government – 03.05.22