Why Should Companies Offer Electric Cars As Company Vehicles?

The company car can be a great perk for employees who travel a lot. The cost of a company car program can be a major decision for businesses, but it can also have benefits for their employees.

Electric cars are becoming more popular. More companies are now enroling EVs for company cars instead of petrol and diesel powered cars due to the lower maintenance costs and significant tax benefits. With inflation and the cost of living crisis, businesses are now under more pressure to cut their operational costs and retain staff.

We discuss how offering electric cars to employees as company vehicles can benefit businesses over time.

Recruitment Incentive

As an owner of a business, offering company cars is a great way to retain and attract employees. This can show employees that their hard work is valued and set an example for new staff who may join your business. The car is usually leased by the company, so employees aren’t tied to financial contracts.

The company must then comply with any MOT, service or maintenance requirements. A business may find it difficult to keep up with the monthly payments and vehicle maintenance, especially if they are small. Small business loans can help finance proposals in their initial stages.

Low benefit-in-Kind rates

Vehicle tax is required for all vehicle owners. This tax amount is dependent on the vehicle’s carbon emissions. Benefits in Kind are items that are provided by an employer to its employees for free or at a reduced price, such as a company vehicle. Taxable benefit for the car must be calculated and taxed.

BIK rates are usually a small portion of the final cost of a vehicle, but they’re even lower for electric cars. The rate for vehicles with carbon emissions between 1-50g/km, and a range of electric 130 miles, is currently 1%. This is expected to rise to 2% by 2022/2023.

Charging allowances

Employers who allow employees to charge up their cars can receive additional subsidies. Businesses can claim 100% of the first-year allowances incurred by installing charging facilities on the premises. Employees who use these amenities, even if they are not provided with EVs from the business, will not be eligible for BIK. Employers may also install charging stations in the employee’s home without creating a Business Incentives Allowance (BIK). However, the reimbursement for electricity used on private miles would be taxed.