Katie De Niese, Tax Manager at Streets Chartered Accountants, dives into the tax implications for electric company cars.
The electric car market is growing quickly, with more than 245,000 pure-electric cars on UK roads at the end of April 2021 and over 515,000 plug-in models (including plug-in hybrids). More than half of all cars are registered to UK businesses on UK roads.
Last year saw the biggest annual increase in number of registrations, with more than 175,000 electric vehicles registered showing a growth of 66% on 2019. This increase could be as a result of any number of factors, social responsibility, increase in mileage range, or indeed Company Car Tax incentives offered by the Government.
Are electric cars exempt from Company Car Tax?
This is a common misconception and one that is easily made. In April 2020, the Benefit In Kind (BIK) rate applying to hybrid cars with Co2 of less than 50 and pure electric cars with a mileage range of over 130, was reduced to zero. This means that for the 2020/2021 tax year, if a car meeting this criteria was provided to an employee, then there would be no Income Tax Liability for the employee and
link source - East Midlands Business Link General