Tax Advantages of having an Electric Vehicle

As the effects of the pandemic are easing in the UK and more people are going back to the office, you may want to consider switching your current car to an Electric Vehicle.

Electric vehicles (EVs) and Hybrid vehicles are becoming a much more viable vehicle option as more charging points are installed, and more affordable electric vehicles are appearing on the market.
As well as being considered cleaner and better for the environment, EVs also come with several tax incentives to help individuals and businesses choose electric over petrol or diesel.

Vehicle (Road) Tax

  • If you have a purely electric car, these are exempt from vehicle tax, meaning that it’s free to tax them
  • If you have a hybrid car, these are still liable for vehicle tax which can cost anything from £0 to £135 per year depending on the levels of CO2 emissions produced by the individual vehicle.

Benefit in Kind (BIK)

  • The BIK charges for an electric vehicle are significantly lower than for petrol or diesel vehicles. For the tax year 2021-2022, fully electric cars only have a BIK charge rate of 1% of the list price of the vehicle (however this will increase to 2% for tax years 2022-2023, 2023-24 and 2024-25).

Congestion Charge

  • Electric cars are exempt from congestion charge, which is great for anyone who must regularly travel in and out of cities and clean air zones. The current congestion charge in London is £15 per day per vehicle, so for those who have to regularly travel to London could make a big saving by switching to electric.

Capital Allowances

  • Cars with CO2 emissions of less than 50g/km are also eligible for 100% first year capital allowances. Therefore, this means that with electric cars you can deduct the full cost from your pre-tax profits.

Government Grants
The Office for Zero Emission Vehicles (OZEV) is currently offering four grants to help fund electric cars and EV chargers:

For further advice or guidance on whether getting an Electric Vehicle is right for you or your business, please don’t hesitate to get in touch.


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