The Government has implemented several tax incentives to encourage businesses and individuals to transition to electric vehicles. While the Benefit-in-Kind (BiK) rate for zero-emission vehicles was two per cent for the 2024/25 tax year, it is set to increase by one per cent each year, reaching nine per cent by the 2029/30 tax year. Additionally, businesses can claim capital allowances and may be able to recover the input VAT, depending on the vehicle’s usage.
However, it is important to note that from April 2025, electric vehicles will be subject to Vehicle Excise Duty (VED). New zero-emission cars registered after 1 April 2025 will incur a first-year VED rate of £10, followed by the standard annual rate of £195 from the second year onwards. The Expensive Car Supplement will also apply to EVs registered from 1 April 2025, adding an extra £410 annually for five years for vehicles with a list price over £40,000.
While the Plug-in Car Grant has been discontinued since 2022, grants for installing charging points remain available. For example, the Electric Vehicle Chargepoint Grant for renters and flat owners offers funding until 31 March 2025.
If you are considering purchasing an electric vehicle, why not speak to one of our tax team members? We can help explain the potential benefits to your business and advise on how best to structure any agreement to obtain tax relief in the most efficient way.