ARTICLE: Employee benefits of switching to an electrified company car
Company car popularity is rising again thanks to the Government’s push to get as many people as possible into electric cars ahead of its 2030 cut-off for the sale of new petrol and diesel vehicles.
To help achieve its aim, the Government has engineered the benefit-in-kind tax scheme used for electric company car drivers until at least 2025.
Company car benefits for employees at a glance:
- Current low BIK rates for EVs can mean substantial pay-packet savings
- Broad range of EVs already available and more arriving all the time
- All-inclusive maintenance, breakdown and insured company car options equals no unexpected costs
- Avoid the cost of depreciation and have a new car every three years
- Less hassle thanks to minimal administration
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Lower tax
There is no getting away from the significant incentives put in place through low benefit-in-kind taxation to attract drivers into electric company cars.
For years drivers have been aware that more efficient, lower CO2 cars have been more attractive in tax terms than vehicles with higher emissions. However, taking the plunge with a fully electric vehicle increases these savings significantly.
At the time of writing (April 22), even the most efficient conventionally fuelled cars attract a BIK rate of more than 20% (for the 2022/23 tax year). Pick a plug-in hybrid and this can drop to around 8-14%, but select a pure EV and you’ll be paying just 2% and you can double-check the latest rates on gov.uk.
What does that look like in pounds?
Petrol: Audi Q5 TFSI 45 quattro S Line PHEV: Audi Q5 TFSIe 50 quattro S Line Electric Vehicle (EV): Audi etron 50 quatro S Line P11D £48,045 £54,800 £68,780 BIK 37% 14% 2% Tax payable in 2022/23 at 20% £3,555 £1,534 £275 Tax payable in 2022/23 at 40% £7,111 £3,068 £550 Vehicles shown are used as examples only, pricing is subject to change. Tax rates correct as of April 2022.
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EV expansion
Manufacturers are racing to fill all market sectors with electric cars. For drivers this means that there’s a huge choice on offer to meet every specific need. EVs span every sector from city cars, through family hatchbacks, to luxury SUVs and everything in between.
On top of a broad range of vehicle types, car makers have also realised that drivers may want different power outputs and ranges. So if you don’t need a car that can do 300 miles on a charge and 0-60 in a supercar rivalling time, you don’t have to pay for it and can pick something far more suitable to your lifestyle.
And while car makers have been broadening the range of electric cars, the charging infrastructure has also been expanding. As of April 2022, the UK already had more than 20,000 public fast, rapid or ultra-rapid charge points* and a further 7,900 slow charge points, making finding somewhere to charge while away from the home or office far easier than you’d expect.
Our partnerships also mean we can help you to source a home charge point wherever you are in the UK**. Enabling you to have an effortless charging solution that fits into your life with ease.
**Hive carry out installations with some industry partners in Northern Ireland (subject to certain conditions).* Source: Zapmap, 22 April 2022
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A peace-of-mind package
Alongside being tax efficient and lower emission, taking an EV as a company car can be one of the easiest ways to run a new car.
Costs such as road tax, servicing, breakdown cover and insured company car options are usually included, along with a support system to help with any issues that may arise.
This safety net eases the pressure of unexpected bills or admin arising from dealing with multiple suppliers yourself.
Utilising the purchasing power of a large leasing firm can also mean savings on breakdown cover, since the agreement typically covers these costs. Alongside these savings, company car drivers also enjoy the benefit of a new car every few years, meaning you’ll have access to the latest gadgets and fuel-saving technology.
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Avoid the cost of depreciation
Running a company car removes the need to negotiate a new, or used, car purchase.
Ordering a new car directly from your company car provider, with expert support and guidance, and simply handing it back at end of the contract, creates a no-pressure environment when it comes to changing your vehicle.
Many company car drivers also appreciate the security of not having to think about depreciation, which can be a variable and unknown factor when personally buying a car.
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Running costs
Zero tailpipe emissions mean that electric cars aren’t just lower emission than petrol or diesel cars, but they’re also currently less expensive to refuel.
In April 2022 with the UK’s capped electricity tariff at 28p per kWh** and a typical EV able to go around 3-4 miles per kWh, that equates to a fuel-only cost of just 7.0-9.3p a mile.
Using a lower-cost off-peak tariff could make the running costs even smaller.
As a comparison, a petrol car capable of 40mpg has a fuel-only cost of 18.6p a mile with an average fuel price*** of 163.8p a litre.
** Source: Ofgem, April 2022
*** Source: The AA, March 2022
If a company car could be right for you but you want to know more about electric cars, you can introduce yourself to EVs by taking a look at our driver guide containing lots of answers to common EV FAQs.
