In this article we look at the potential benefit in kind, which is remarkably low for certain electric cars. Plus there is no fuel benefit. 100% Capital Allowances and grants are available for both the car and charge points make electric cars worth considering.
Electric cars benefit in kind 2022/23
The taxable benefit of a vehicle is calculated using the list price of the vehicle multiplied by the relevant percentage rate issued by HM Revenue & Customs for the appropriate tax year. For electric cars you also need to take into account the number of miles the vehicle can travel solely on electric. The list price of a vehicle must always include the cost of the battery for plug-in hybrid or battery electric company cars even if the battery is leased separately. Please note if an employer leases a battery for an employee’s company car then this is a taxable benefit.
The percentages for electric cars are set out below.
| For vehicles purchased before 6 April 2020 | ||
| CO2 emissions (g/km) | Electric Mileage Range | Petrol/Electric/RDE2 Diesel |
| 0 | N/A | 1% |
| 1-50 | Over 130 | 2% |
| 1-50 | 70-129 | 5% |
| 1-50 | 40-69 | 8% |
| 1-50 | 30-39 | 12% |
| 1-50 | Under 30 | 14% |
Â
| For vehicles purchased after 6 April 2020 | ||
| CO2 emissions (g/km) | Electric Mileage Range | Petrol/Electric/RDE2 Diesel |
| 0 | N/A | 1% |
| 1-50 | Over 130 | 1% |
| 1-50 | 70-129 | 4% |
| 1-50 | 40-69 | 7% |
| 1-50 | 30-39 | 11% |
| 1-50 | Under 30 | 13% |
Car Fuel Benefit in kind
The car fuel benefit charge is usually paid by employees who receive free fuel from their employer however there is no car fuel benefit for battery electric cars as electricity is not classed as a fuel. There is also no taxable benefit for employees charging their company car at the workplace.
However please be aware a taxable benefit may apply to plug-in hybrid cars (on the non- electric mileage) and also an employer providing a charge point for an employee at their home.
Advisory Fuel Rates
Advisory fuel rates can be used by employees to reimburse their employer for the cost of private milage where an employer provides free fuel for a company car these rates can also be used for petrol-hybrid and diesel-hybrid cars. The advisory rate for fully electric cars is 5 pence per mile.
Approved Mileage Allowance Payment
Approved mileage allowance payments are applied to all employee-owned vehicles which are used for business purposes. These rates are 45 pence per mile for the first 10,000 business miles and 25 pence per mile thereafter.
Enhanced Capital Allowances
A business can claim 100% first year capital allowance on the purchase of a new car with between zero and 50g/km emissions between April 2021 and April 2025, therefore reducing business profits by the full cost of the vehicle.
Low-emission vehicles eligible for a plug-in grant
Discounts are available on the price of brand new low-emission vehicles through a government grant given to vehicle dealerships and manufacturers. The cars must cost less than £50,000 and the maximum grant available for cars is £3,000. You do not have to do anything to receive this grant the dealer will include the available grant in the vehicle’s price. Not all models of low-emission vehicles are eligible for a grant, only those which have been approved by the government. There is a list of vehicles eligible for plug-in grants at www.gov.uk/plug-in-car-van-grants
Electric Vehicle Charge Schemes
The Electric Vehicle Home Charge Scheme provides grant funding of up to 75% (capped at £350) towards the cost of installing electric vehicle charge points at domestic properties in the UK.
The workplace charging scheme is a voucher- based scheme that provides support towards the up-front costs of the purchase and installation of electric charging points for eligible businesses.
The Electric Vehicle Homecharge Scheme is now no longer open to new applicants. This has now been replaced by The EV Chargepoint grant. HMRC have confirmed that if you have already applied for the EHVS grant and your case is under consideration then you do not need to submit an application under the EV Chargepoint grant scheme. The EHVS will remain open for resubmissions until 31 March 2023.
EV Chargepoint Grant
The EV Chargepoint grant replaced the Electric Vehicle Charge Scheme on 1 April 2022 and provides funding of up to 75% towards the cost of installing electric vehicle smart changepoints at domestic properties across the UK.
If you know anyone who may benefit from our newsletters and updates, please feel free to forward this blog or ask them to opt in to our mailing list.
Katy North
