16/03/2025
**The New EV Car Benefit-in-Kind for Directors in the UK: What You Need to Know**
As the UK continues its transition to a greener economy, the government has introduced new incentives to encourage the adoption of electric vehicles (EVs). One of the key benefits for company directors and business owners is the **low Benefit-in-Kind (BiK) tax rate** for EVs. At AP Accounting Solutions, we want to ensure you understand how this incentive works and how you can take advantage of it.
# # # **What is Benefit-in-Kind (BiK)?**
Benefit-in-Kind (BiK) is a tax levied on employees and directors who receive perks from their company that aren’t included in their salary. One of the most common BiK perks is a company car.
# # # **What’s Changing for EVs?**
For the 2024/25 tax year, the BiK rate for fully electric vehicles remains at **2%**, making them significantly more tax-efficient than petrol or diesel company cars, which can attract BiK rates of up to **37%**.
The government has also outlined gradual increases in BiK rates for EVs:
- **2% until April 2025**
- **3% in 2025/26**
- **4% in 2026/27**
- **5% in 2027/28**
Even with these small increases, EVs remain a highly attractive option for company car schemes compared to traditional vehicles.
# # # **What Does This Mean for Directors?**
If you’re a company director, switching to an electric vehicle through your business can offer **significant tax savings**, including:
✅ **Lower BiK tax bills** – Pay much less tax compared to petrol/diesel alternatives.
✅ **Corporation tax savings** – Your company can claim **100% first-year capital allowances** on the purchase of an EV.
✅ **Lower running costs** – EVs generally have lower fuel and maintenance costs.
✅ **National Insurance savings** – As the BiK value is lower, your company pays less employer National Insurance contributions.
# # # **How to Maximise the Benefit**
To make the most of this tax-efficient scheme:
🔹 Consider leasing an EV through your company instead of purchasing it personally.
🔹 Explore salary sacrifice schemes for employees to further benefit from tax savings.
🔹 Ensure charging costs are structured properly to maximise allowable business expenses.
# # # **Final Thoughts**
With the government committed to phasing out petrol and diesel cars, now is the perfect time for company directors to take advantage of the low BiK rates on EVs. Not only can you reduce your tax burden, but you’ll also contribute to a more sustainable future.
At **AP Accounting Solutions**, we specialise in helping business owners and directors navigate tax-efficient strategies. Get in touch with us today to discuss how an EV can benefit your company financially!
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