The rise of electric vehicles (EVs) in the UK is driven not only by environmental concerns but also by significant tax incentives. For both businesses and individuals, choosing an EV can lead to considerable financial savings.
1. Benefit-in-Kind (BiK) Tax Savings
One of the major perks for employees is the low BiK rate on electric company cars. For the tax year 2023-24, EVs have a BiK rate of just 2%, compared to up to 37% for petrol and diesel cars. This results in substantial tax savings for employees who opt for an electric company car.
2. Capital Allowances for Businesses
Businesses can benefit from the First Year Allowance (FYA), which allows them to claim 100% of the cost of a new electric car against their taxable profits in the first year. This immediate deduction makes EVs an attractive option for companies looking to modernize their fleets.
3. Zero Road Tax (VED)
Fully electric vehicles are exempt from Vehicle Excise Duty (VED) until 2025. After that, EVs will still attract lower rates than traditional fuel vehicles, saving owners money on road tax.
4. Charging Benefits
Installing EV charging points at the workplace also offers tax relief, as businesses can claim 100% of the cost in the first year. Plus, employees can charge their EVs at work tax-free.
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