Electric Vehicles: Tax-Efficient Benefits for 2025/26 | Trueman Brown

Are electric vehicles still a tax-efficient benefit?

At Trueman Brown we recognise that choosing an electric vehicle can still bring significant tax advantages for companies and employees.

The keyword electric vehicles appears right at the outset because it remains central to deciding whether a company car strategy makes sense.

With changes for the 2025/26 tax year now confirmed, it’s vital to review how the tax benefits for electric vehicles stack up — and how they compare to petrol or diesel alternatives.

Tax advantages of electric vehicles

The tax system is structured to favour zero-emission or ultra-low emission vehicles.

For company cars, taxable benefits depend on a car’s CO₂ emissions (and in the case of plug-ins, its electric-only range).

Historically, selecting an electric vehicle helped maximise savings.

For example:

  • Providing electricity for private mileage in an electric company car carries no fuel-benefit charge (because HMRC do not treat electricity as “fuel” for those purposes).

  • For tax years prior to 2025/26, electric vehicles benefitted from very low Benefit-in-Kind (BiK) rates — e.g., 2% of list price.

  • Employers could claim generous capital allowances when purchasing electric vehicles and EV charging infrastructure.

Infographic titled "Electric Vehicles Tax Efficient Benefits 2025/26" showing key UK tax advantages of electric company cars, including low Benefit-in-Kind rates, tax-free salary sacrifice savings, exemption from fuel benefit charges, and 100% corporation tax relief. Includes icons of EVs, charging stations, pound symbols, and tax briefcase.

Tax advantages of electric vehicles

The tax system confers a number of tax advantages on electric and ultra-low emission cars.

For 2022/23, 2023/24 and 2024/25 electric cars are taxed on 2% of their list price.

The charge for ultra-low emission cars depends on their electric range, with the charge for cars in the 1—50g/km emissions bracket ranging from 2% for those with an electric range of at least 130 miles to 14% for those with an electric range of less than 30 miles.

At the other end of the scale, the charge for petrol cars with CO2 emissions of 160g/km and above is 37% of the list price.

Employers can also pay for the electricity for private mileage in an electric company car without the employee suffering a fuel benefit charge as HMRC do not regard electricity as a ‘fuel’ for these purposes.

By contrast, if fuel is provided for private mileage in a petrol or diesel company car, a fuel benefit charge arises, found by multiply the appropriate percentage for the car’s CO2 emissions by the multiplier for the year.

As this is set at £25,300 for 2022/23, rising to £27,800 for 2023/24, the potential savings of going electric are again significant.

 

 

​How Trueman Brown can help you leverage electric vehicles

At Trueman Brown we specialise in helping businesses and directors make informed decisions around company cars — including electric vehicles.

Whether you are advising on the tax implications, structuring a salary-sacrifice scheme, or assessing the best fleet strategy, we can assist.

Contact Mark Hewitt at mark@truemanbrown.co.uk or call 01708 397262 to discuss how electric vehicles could benefit your business and what steps you should take for the 2025/26 tax year and beyond.

FAQ on electric vehicles

Q: What is the Benefit-in-Kind (BiK) rate for electric vehicles in 2025/26?
A: The rate is 3% of the vehicle’s list price.

Q: Will the BiK rate for electric vehicles stay at 3% indefinitely?
A: No. It is planned to increase to 4% in 2026/27 and 5% in 2027/28.

Q: How does the BiK tax for electric vehicles compare to petrol or diesel cars?
A: Electric vehicles continue to have much lower BiK rates (3% in 2025/26) compared to petrol/diesel cars which may have rates up to 37%.

Q: Are electric vehicles still exempt from Vehicle Excise Duty (VED)?
A: No. From April 2025, many electric vehicles will pay standard VED rates and may face expensive-car supplements if the list price is above certain thresholds.

Q: Does the tax advantage for electric vehicles mean you should always choose one for a company car?
A: Not necessarily. While the tax advantage remains strong, you should consider charging infrastructure, total cost of ownership, lease terms, vehicle list price, the employee’s tax band and how long you plan to hold the vehicle. Each case is unique.

Q: How can Trueman Brown help with electric vehicle decisions?
A: We provide tailored advice on company car tax, structuring of salary-sacrifice schemes, fleet selection, BiK calculations and ongoing compliance.

Contact Mark at mark@truemanbrown.co.uk or call 01708 397262 for a discussion.

If you’d like us to include a worked example for your own business (with your vehicle list price, employee tax band, etc.), we’d be happy to prepare one.

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