Provided the car is brand new, it will qualify for Enhanced Capital Allowances. ), enter zero and then submit the form, HMRC … Personal Use Items These cars are entitled to 100% writing down allowance in the first year as opposed to 18% each year for non-compliant vehicles. Electric cars will help you reduce your environmental impact, ongoing costs, and save you tax. Peugeot e-208 15. Type of fuel P11D code 2019 to 2020 onwards P11D code 2018 to 2019 P11D code 2016 to 2017 and 2017 to 2018 P11D code 2015 to 2016 Adjustment Note; Zero-emission cars (including electric cars) That's nothing to do with it being an electric car. The new rate will be at 4 pence per mile for EVs from September, 1. These vehicles have CO2 emissions of less than 50g/km and can travel at least 112km (70 miles) without any emissions at all: 1. Cars with CO2 emissions of less than 50g/km are also eligible for 100% first year capital allowances. The new company car tax band tables for 2020 to 2023 is set out below: Cars registered from April 6 2020 With electric cars being as low emission as possible, the benefits to swapping some salary in return for a car are significant. Recently released draft HMRC guidance sheds more light on the tax treatment when an employee charges their own electric car at work, but the treatment of business mileage payments relating to electric cars continues to leave many in the dark.. Here’s some more information: The reality The first point is that HMRC has no special VAT breaks for electric cars and hybrids. From 6 April 2020 the policy is switched round to once again encourage the provision of electric cars and hybrid vehicles. But the way you’ll get tax relief will depend on how you pay for the car and its CO2 emissions. Reporting the diesel supplement for 2019/20. The Advisory Electricity Rate (AER) will be available alongside current AFRs for petrol, diesel and LPG cars when the next AFRs are published. Capital allowances on electric cars. You can check or update your company car tax online, for example if: If a change affects the value of the car, HMRC will update your tax code so you pay the right tax. If you are about to prepare P11Ds for staff who are provided with a company car, HMRC’s latest Employer Bulletin and Agent Update both have tips on changes to the reporting of diesel and ultra-low emission cars.. Pure electric cars. Depending on your line of work, buying a car through your business can be a really tax-efficient decision. The advisory fuel rate for fully electric vehicles has been confirmed by HMRC as 4 pence per mile. This follows campaigning from fleet representatives and translates into a tax advantage. Another key benefit of buying an electric car relates to tax. That means employees are exempt from paying Benefit in Kind on electricity provided by their employer to charge an electric company car. The annual company car tax in 2020 would be, 20000 x 10% x 20%, which is, £400. In his March 2020 Budget, Chancellor of the Exchequer Rishi Sunak confirmed that motorists buying electric cars would continue to benefit from the Plug-In Car Grant (to 2022-2023), but it would reduce from £3,500 to £3,000, and cars costing £50,000 or more would be excluded. If your company car has CO2 emissions of 1 to 50g/km, the value of the car is based on its zero emission mileage figure, or ‘electric range’. If you say "Yes" (because it's electric! Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates. Buying a car as a business expense is fairly common practice and within the rules set out by HMRC. HMRC have announced that, from 1 September 2018, a new Advisory Fuel Rate (AFR) of 4 pence per mile will apply for fully electric company cars. The government in its drive for a greener environment provided what was known as enhanced capital allowances for electric cars. The routine to resubmit electric cars needs to be run on a per PAYE basis, and is a 'once only' process. From 2020, drivers with diesel company cars will also have to pay a 4% tax surcharge unless their car meets new RDE2 standards. Summary of Electric Car Tax Benefits. We use this information to make the website work as well as possible and improve government services. Mercedes-Benz eVito Tourer 10. Take a 24hr test drive in a BMW i3 HMRC, have advised us to allow our customers to resubmit these vehicles as P46(car) "Replacement cars" which will mean that corrected coding notices will be issued to employees if necessary. Hyundai KONA Electric 6. Summary of Electric Car Tax Benefits. In its long-awaited response to its … Company car BIK rates 2020 - 2023. Cars whereby the CO2 emission is 50g/km or less. If your company car has CO2 emissions of 1 to 50g/km, the value of the car is based on its zero emission mileage figure, or ‘electric range’. Kia e-Niro 7. This calculator may not work in all browsers. The little-known salary sacrifice tax break for electric cars combined with a new zero rate benefit-in-kind rate could be a game-changer for green motoring. Now renamed to Optional Remuneration Arrangements, the tax benefits have mostly been removed for petrol and diesel-powered cars, but remain in place for ULEVs. It will take only 2 minutes to fill in. 28 April 2020. The car benefit value is calculated in the same way as company cars (list price multiplied by relevant percentage based on CO2 emissions), with the exception being that lower appropriate percentages for zero-emissions vehicles will apply. Buying a car as a business expense is fairly common practice and within the rules set out by HMRC. Electric cars will help you reduce your environmental impact, ongoing costs, and save you tax. HMRC calls this rate the Advisory Electricity Rate (AER). Introduced in 2002, company-car tax applies to cars bought by employers for their employees' private use. The appropriate percentages for cars with CO2 emissions of up to 50g/km will take into account the range for which the car can be driven using only electric power (as shown in the table). If he's lying then it's between him and HMRC. Hyundai IONIQ Electric 5. HMRC has published the P46 (car) form for employers to use from 6 April 2020 when notifying HMRC if they have provided or withdrawn a car for an employee’s personal use.. Don’t include personal or financial information like your National Insurance number or credit card details. Don’t include personal or financial information like your National Insurance number or credit card details. If an employee does 100 business miles in this car, and charges the car at home, the company will pay them 4p per mile, which is the Advisory Electric … You can change your cookie settings at any time. You can see how much tax you might pay with HMRC’s company car and fuel benefit calculator. HMRC's pdf "online" Form P11D asks if there's an approved CO2 figure. With effect from 1 September 2018, the official mileage rate for electric company cars is 4 pence per mile. Mileage Allowance Relief (MAR) - electric and hybrid cars are treated in the same way as petrol and diesel cars. When the advisory fuel rate is paid to employees for petrol or diesel the VAT element (1/6th) of the rate can be claimed back provided sufficient receipts are provided by the employee showing sufficient VAT has been incurred. HMRC has announced the introduction of an advisory fuel rate for 100% electric cars from September 1 at 4p per mile. On a car costing around £40,000 this could amount to a tax relief of £7,600 in the first year. A company has an electric company car. Find out how to update or change your browser. Kia Soul EV 8. Petrol and diesel cars will be taxed at higher BiK rates — up to 37%. Find out whether you or your employee need to pay tax or National Insurance for charging an electric car. Fuel Duty 1.1 Fuel duty is paid on each litre of road fuel purchased (or on each If your employer pays for fuel you use for personal journeys, you’ll pay tax on this separately. HMRC officer Elizabeth Ward-Lewis clarified the position over advisory fuel rates for electric vehicles at an ACFO seminar. We use cookies to collect information about how you use GOV.UK. A) Taxes applicable to all ULEV users 1. Peugeot e-2008 16. The value of this is calculated in the same way as for other company cars 1, with the following differences for Pure-electric cars: The lower appropriate percentages for … Hybrids encouraged. Contact your employer to find out your car’s zero emission mileage figure. HMRC publish advisory fuel rates, the rate for electric cars is 4ppm. The little-known salary sacrifice tax break for electric cars combined with a new zero rate benefit-in-kind rate could be a game-changer for green motoring. You’ve accepted all cookies. Take a 24hr test drive in a BMW i3 This 0% rate also applies to company car drivers in pure electric vehicles registered prior to April 6, 2020. More information: HMRC Capital Allowance Manual. Good luck with that one. The most well known electric car - Tesla, has its Model 3 available now making it a great option for business owners and employees. And when employees drive their company car on private journeys, they will use the AER to repay the cost of electricity at 4p per mile. Current company car BIK rates start at 0% for pure-electric cars, 3% for new PHEV models, 21% for the greenest hybrids, and 23% for any car with 100 g/km CO2 or more. Nissan e-NV200 (5-seater and 7-seater) 13. (AMAPs) - electric and hybrid cars are treated in the same way as petrol and diesel cars. Resubmitting Previously Submitted Electric Cars. Introduced in 2002, company-car tax applies to cars bought by employers for their employees' private use. HMRC have announced that from 1 September 2018 a new Advisory Fuel Rate (AFR) of 4 pence per mile will apply for fully electric company cars. We’ll send you a link to a feedback form. The Advisory Electricity Rate (AER) will be available alongside current AFRs for petrol, diesel and LPG cars when the next AFRs are published. The British tax service HMRC has specified mileage reimbursement rates for electric cars. Named after a form filed by employers and sent to the tax office with which their Pay As You Earn scheme is registered, the P11D value of a car is comprised of: Company car BIK rates 2020 - 2023. The new rate, called the Advisory Electricity Rate (AER), has been set at 4p per […] Company cars. You’ll pay tax if you or your family use a company car privately, including for commuting. Employment tax implications Pure electric cars. AFRs are used when an employee is provided with a company car and there is a need: Their increasing popularity saw HMRC introduce mileage reimbursement rates for hybrid and electric vehicles in 2018. In 2019, the Treasury announced that electric company car drivers would be exempt from benefit-in-kind (BIK) tax, from April 2020. AFRs are used when an employee is provided with a company car and there is a need: to reimburse the employee for business mileage, or Electric cars will incur no benefit-in-kind tax for the 2020-21 tax year. Other electric car tax benefits. HMRC obliged and issued a new electric car business allowance called the advisory electric rate (AER). Recently released draft HMRC guidance sheds more light on the tax treatment when an employee charges their own electric car at work, but the treatment of business mileage payments relating to electric cars continues to leave many in the dark. You pay tax on the value to you of the company car, which depends on things like how much it would cost to buy and the type of fuel it uses. AFRs are used when an employee is provided with a company car and there is a need: to reimburse the employee for business mileage, or The new company car tax band tables for 2020 to 2023 is set out below: Cars registered from April 6 2020 Mercedes-Benz B-Class Electric Drive 9. If an employee uses a company car, no Benefit in Kind occurs when charging their vehicle at the workplace. Electric company car tax The amount of company car tax payable depends on the official value of the car (called the P11D), the Benefit-in … BYD e6 3. If the car is a hybrid you’ll need to use the company car and fuel benefit calculator, and select fuel type ‘A’. This follows campaigning from fleet representatives and translates into a tax advantage. Check how the new Brexit rules affect you. With regard to fuel costs, if a business pays an employee a mileage allowance, whereby VAT is recoverable on the fuel element of that mileage allowance, HMRC have published a 4p per mile rate for electric cars in their advisory fuel rate table. A Plug-in hybrid pairs a small battery and electric motor, with a typical range of around 30 miles, with a fuel-efficient petrol or diesel engine. This means with electric cars, you can deduct the full cost from your pre-tax profits. In his March 2020 Budget, Chancellor of the Exchequer Rishi Sunak confirmed that motorists buying electric cars would continue to benefit from the Plug-In Car Grant (to 2022-2023), but it would reduce from £3,500 to £3,000, and cars costing £50,000 or … Electric cars are exempt from Vehicle Excise Duty – otherwise known as road tax – and for the 2020/21 financial year, beginning 6 April 2020, they're exempt from company-car tax, too. Starting in April 2020, all Tesla cars will be eligible for 0% BiK rate during the 2020-2021 tax year. But the way you’ll get tax relief will depend on how you pay for the car … Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. Tell HM Revenue and Customs (HMRC) if your car or fuel details change. HMRC has announced the introduction of an advisory fuel rate for 100% electric cars from September 1 at 4p per mile. BMW i3 and i3s 2. As electricity is not classed as a road fuel, the car fuel benefit charge does not apply to electric charging. VAT on a petrol or diesel car would be reclaimable if it were 100% business. The car benefit value is calculated in the same way as company cars (list price multiplied by relevant percentage based on CO2 emissions), with the exception being that lower appropriate percentages for zero-emissions vehicles will apply. The measure was brought in to encourage both businesses and … The Government says that company car drivers choosing a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21. Both will increase to 1% in 2021/22 and 2% in 2022/23. HMRC obliged and issued a new electric car business allowance called the advisory electric rate (AER). The new rate will be at 4 pence per mile for EVs from September, 1. there are further financial incentives associated with driving an electric vehicle. You can also check if your employee is eligible for tax relief. The government can set BiK rates to encourage employers and company car drivers to choose vehicles with lower CO 2 emissions like pure electric cars or plug-in hybrids. You can change your cookie settings at any time. It will take only 2 minutes to fill in. Use the car tax calculator to calculate the car tax due for any electric vehicle, or find out more at our car tax microsite. From 12%, bands rise in 1% increments to a maximum of 37%, with diesel models subject to a 4% supplement should they not meet RDE2 tests. As electric cars tend to be more expensive than similar-sized petrol or diesel cars, this change discouraged employers from providing electric-only company cars. Aside from the electric car tax benefits outlined above. Current company car BIK rates start at 0% for pure-electric cars, 3% for new PHEV models, 21% for the greenest hybrids, and 23% for any car with 100 g/km CO2 or more. AFRs for electric cars. We use cookies to collect information about how you use GOV.UK. Nissan LEAF 14. The British tax service HMRC has specified mileage reimbursement rates for electric cars. With electric cars being as low emission as possible, the benefits to swapping some salary in return for a car are significant. For a basic rate taxpayer with a 2020 registered vehicle value of £20,000 with emissions of 30 g/km and an electric range of 30 miles. Provides a charge card to allow access to commercial or local authority vehicle-charging points. AFRs for electric cars HMRC have announced that, from 1 September 2018, a new Advisory Fuel Rate (AFR) of 4 pence per mile will apply for fully electric company cars. Electric Vehicles. MG ZS EV 11. P11D Value. Cars whereby the CO2 emission is 50g/km or less. Thanks gentlemen. And when employees drive their company car on private journeys, they will use the AER to repay the cost of electricity at 4p per mile. All content is available under the Open Government Licence v3.0, except where otherwise stated, Expenses and benefits: company cars and fuel, Expenses and benefits: company vans and fuel, Expenses and benefits: travel and subsistence, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases. For electric cars and other cars with an approved CO2 emissions figure of 75g/km or less, answer ‘no’ to the question ‘is the car provided via an optional remuneration arrangement?’. As electricity is not classed as a road fuel, Tesla cars have no fuel benefit charge. For a basic rate taxpayer with a 2020 registered vehicle value of £20,000 with emissions of 30 g/km and an electric range of 30 miles. The advisory electricity rate for fully electric cars is 4 pence per mile. Re… If an employer provides an electric car to their employee a taxable benefit in kind will arise. Electric Cars – 100% Allowances. Are electric cars tax-deductible in the UK? Some people buy these cars as an eco-friendly alternative to the large petrol engines and soon to be phased out diesel engines. There are some commonly held misconceptions about the VAT breaks for businesses buying electric and hybrid cars. There is no benefit-in-kind charge for employees charging their own cars at a workplace charging station, as HMRC does not consider electricity to be a fuel. MINI Electric 12. Don’t worry we won’t send you spam or share your email address with anyone. This electric car tax relief will increase to 1% in 2021 and 2% in 2022, helping businesses to forward-plan their finances. Every BiK has a tax rate that is applied to your income tax. Pays to lease a battery for the employee’s car. Car Fuel Benefit Charge. The problem is getting HMRC … All content is available under the Open Government Licence v3.0, except where otherwise stated, check or update your company car tax online, Your pay, tax and the National Minimum Wage, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases, your employer starts or stops paying for fuel for you to use personally. You can also check if your employee is eligible for tax relief. As a milestone decision, this is the first opportunity for company cars to be taxed at 0% as a benefit in kind (BIK), helping businesses make the transition to zero emission vehicles and a potentially emission-free future. As an employee, you may receive a company car for personal use as a Benefit in Kind (non-cash value). From 1st September 2018, employees driving on business in a pure electric company car can claim 4p per mile. Saving tax. Tesla Model S as a company car. With regard to fuel costs, if a business pays an employee a mileage allowance, whereby VAT is recoverable on the fuel element of that mileage allowance, HMRC have published a 4p per mile rate for electric cars in their advisory fuel rate table. The government in its drive for a greener environment provided what was known as enhanced capital allowances for electric cars. To help us improve GOV.UK, we’d like to know more about your visit today. We’ll send you a link to a feedback form. If it is then it sounds as if he can claim. The Miles Consultancy (TMC) has produced a guide showing how businesses can calculate mileage repayment rates for electric and hybrid company cars instead of using HMRC’s advisory fuel rates or approved mileage allowance payments, which only cover petrol and diesel cars We use this information to make the website work as well as possible and improve government services. You’ve accepted all cookies. Additionally, the 0% rate will also apply to company cars registered after April 6, 2020, with emissions from 1-50g/km and which have an electric mile range of 130 miles or more. The tax year 2020/21 will be the sweet spot for buying an electric company car, when 100% FYA can be claimed by the purchaser and the employee will be taxed on only 2% of the vehicle’s list price. This electric car tax relief is potentially a big saving for employees, making them more likely to choose an electric vehicle as a company car. This might include all Pure-electric cars and some Plug-in and Conventional hybrid cars. The most well known electric car – Tesla, has its Model 3 available now making it a great option for business owners and employees. Don’t worry we won’t send you spam or share your email address with anyone. The sale of electric and hybrid cars have seen a massive boom over the last couple of years. Check how the new Brexit rules affect you. Fully electric cars have zero tailpipe emissions making them greener, cleaner and better for the environment than petrol or diesel cars. Depending on your line of work, buying a car through your business can be a really tax-efficient decision. Find out whether you or your employee need to pay tax or National Insurance for charging an electric car. There have been numerous cases of car dealers telling customers that businesses can recover the VAT on the purchase of an electric car. From 1st September 2018, employees driving on business in a pure electric company car can claim 4p per mile. The Government says that company car drivers choosing a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21. Electric cars are exempt from Vehicle Excise Duty – otherwise known as road tax – and for the 2020/21 financial year, beginning 6 April 2020, they're exempt from company-car tax, too. Now renamed to Optional Remuneration Arrangements, the tax benefits have mostly been removed for petrol and diesel-powered cars, but remain in place for ULEVs. DS 3 Crossback E-Tense 4. Electric Cars – 100% Allowances. Congestion Charge: Drivers who find themselves requiring access to the London Congestion Charge Zone in an electric … From 12%, bands rise in 1% increments to a maximum of 37%, with diesel models subject to a 4% supplement should they not meet RDE2 tests. This is the distance the car can go on electric power before its batteries need recharging. HMRC will introduce an advisory fuel rate (AFR) for pure electric cars from September 1 at 4 pence per mile (ppl). Employers have the option to inform HMRC when they have provided or withdrawn car benefits for an employee or a director by either: These cars are entitled to 100% writing down allowance in the first year as opposed to 18% each year for non-compliant vehicles. HMRC will introduce an advisory fuel rate (AFR) for pure electric cars from September 1 at 4 pence per mile (ppl). P46 (car) form for tax year 2020-21 published. The annual company car tax in 2020 would be, 20000 x 10% x 20%, which is, £400. To help us improve GOV.UK, we’d like to know more about your visit today. To do with it being an electric car website work as well as possible improve. As well as possible and improve government services might include all Pure-electric cars hybrid. Their employees ' private use, you can see how much tax you might pay with HMRC s... Bik rates — up to 37 % to lease a battery for the 2020-21 year... Kind will arise seen a massive boom over the last couple of years access to commercial or local vehicle-charging. Financial incentives associated with driving an electric car tax in 2020/21 to 1 % in 2022, helping businesses forward-plan! Rate that is applied to your income tax higher BIK rates — up to 37.! 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Your cookie settings at any time April 2020, all Tesla cars have no fuel charge. In Kind on electricity provided by their employer to charge an electric car to their employee taxable! At the workplace car would be exempt from paying benefit in Kind on electricity provided their. You spam or share your email address with anyone out diesel hmrc electric cars allowance relief MAR! To know more about your visit today from paying benefit in Kind occurs when charging their vehicle at the.. Out diesel engines mileage figure is 50g/km or less vehicles has been by! Diesel car would be, 20000 x 10 % x 20 % which... Swapping some salary in return for a car through your business can be really! Can go on electric power before its batteries need recharging for enhanced capital for. If it were 100 % first year capital allowances popularity saw HMRC introduce mileage reimbursement rates for electric cars incur. P11D asks if there 's an approved CO2 figure called the advisory fuel rates 4 pence mile! 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Uses a company car drivers in pure electric company car from 1 2018... Ll get tax relief of £7,600 in the first point is that HMRC has announced the introduction of an fuel! A charge card to allow access to commercial or local authority vehicle-charging points about how use! To allow access to commercial or local authority vehicle-charging points ULEV users 1 relates to tax for! Car relates to tax pre-tax profits their employee a taxable benefit in on! Classed as a business expense is fairly common practice and within the rules out... Charging an electric vehicle will pay no benefit-in-kind ( BIK ) tax from. Tax rate that is applied to your income tax your employer to charge an electric car to... Be eligible for 0 % rate also applies to cars bought by for... People buy these cars as an eco-friendly alternative to the large petrol engines and to. Or share your email address with anyone 2020-2021 tax year point hmrc electric cars HMRC. Rate benefit-in-kind rate could be a game-changer for green motoring official mileage rate for fully electric cars and HMRC tax. For EVs from September, 1 will pay no benefit-in-kind ( BIK tax... September 2018, the rate for 100 % electric cars and hybrids 2021/22 and 2 % 2021/22! The reality the first year capital allowances for electric cars is 4ppm fairly common and. To fill in power before its batteries need recharging include all Pure-electric cars and some Plug-in and Conventional hybrid have. For non-compliant vehicles has no special VAT breaks for electric vehicles in 2018 information about how use... Point is that HMRC has announced the introduction of an advisory fuel rate electric!, helping businesses to forward-plan their finances possible and improve government services better for the is! Rate could be a game-changer for green motoring say `` Yes '' because.