The rise of electric cars has been notable in recent years, driven by environmental goals and government incentives. As of 2023, there were over 1m electric cars on British roads, and with the government pushing towards net-zero emissions by 2050, the transition to electric vehicles (EVs) is expected to accelerate further.
However, the landscape has changed for businesses offering electric cars as a company benefit. The incentives and tax advantages that once made EVs attractive for employers and employees alike are undergoing shifts. So, are electric cars still a good company benefit? Let’s explore the current situation.
The changing tax incentives for electric vehicles
When electric cars first gained traction, the significant tax relief available was one of the most attractive aspects for businesses. The government’s ambition to reduce emissions meant that tax benefits for EVs were generous. For example, electric vehicles were once subject to a benefit-in-kind (BIK) tax rate of just 0%, which rose slightly in subsequent years. However, this rate has gradually increased, and further rises are expected over the coming years.
For 2024/25, the BIK rate for electric vehicles is set at 2% (rising to 3% in April 2025), which is still far lower than the rate for petrol or diesel vehicles, making electric cars a financially attractive perk. However, businesses need to be aware of the forecasted increase in BIK rates to 5% by 2026/27. Although still relatively low, this uptick may cause some employers to reconsider whether electric cars remain a competitive company benefit compared to other options.
We believe staying informed about these changes is crucial for making well-informed decisions regarding your company’s fleet or employee benefits package.
Initial cost vs long-term savings
Another factor that makes electric cars appealing to businesses is the potential for long-term savings. While the upfront cost of an EV tends to be higher than traditional petrol or diesel cars, the long-term savings from lower fuel costs and maintenance often offset this. The average cost of charging an electric car at home is estimated to be around £15 for a full charge, which can offer significant savings compared to the cost of petrol or diesel. Electric vehicles generally have fewer moving parts, meaning reduced maintenance costs over time.
Offering electric cars as part of a benefits package can also be a forward-thinking, environmentally conscious choice for businesses, which may appeal to employees. Many professionals, especially in leadership roles, increasingly consider sustainability as part of their corporate responsibility. Offering EVs as part of your company benefits package can be a way to signal your commitment to these values.
However, businesses must also weigh the high initial purchase cost, especially if they’re looking to offer several vehicles as part of a fleet. While the savings on fuel and maintenance can add up over time, the initial outlay remains a consideration, particularly during economic uncertainty.
The impact of charging infrastructure
One of the ongoing challenges with EVs is the availability and convenience of charging infrastructure. The government has committed to expanding the charging network, with a target of 300,000 public charging points by 2030. While the infrastructure is improving, it’s still a concern for businesses, particularly those with employees who may not have easy access to charging points at home or in the office.
If your business is considering offering electric cars as a benefit, it’s essential to consider how easy it will be for your employees to charge their vehicles. Some companies are investing in workplace charging stations, which can help alleviate concerns. However, this adds another layer of cost and logistical planning. For those without access to convenient charging, using EVs could become more of a burden than a benefit.
We recommend assessing the practicality of EVs for your employees before making any commitments. Access to charging points can significantly determine whether an electric car is a practical benefit.
Environmental impact and company reputation
The environmental impact is one of the strongest arguments for continuing to offer electric cars as a company benefit. EVs produce zero tailpipe emissions, making them a crucial tool in reducing your company’s carbon footprint. For businesses keen to position themselves as leaders in sustainability, offering electric cars can be a key component of your corporate social responsibility strategy.
In addition to the environmental benefits, offering electric vehicles may help improve your company’s reputation. Increasingly, employees and clients alike are scrutinising businesses for their sustainability practices. By providing EVs, you may be able to enhance your brand’s image and appeal to a broader demographic of environmentally conscious individuals and organisations.
What’s next for electric cars as a company benefit?
While the financial benefits of offering electric cars may be shifting, several compelling reasons exist to consider them as part of a company benefits package. The potential for long-term savings, the positive impact on your company’s carbon footprint and the ability to appeal to sustainability-minded employees all make EVs an attractive option.
However, it’s essential to stay informed about the changing tax landscape and weigh the practicality of offering electric cars to your team. We recommend thoroughly reviewing your employees’ needs, the available charging infrastructure, and the total cost of ownership before making any decisions.
At Venthams, we are here to help you navigate these changes and assess whether EVs are the right choice for your business. Whether you’re looking to offer EVs as a benefit or explore other tax-efficient options, our team is ready to provide the expertise you need.
Contact us to find out how we can assist you in making the right decision for your company.