LeafChoosing an electric vehicle as a company car could see the driver better off financially than choosing a conventional fuel car.

Once you have established whether your daily mileage would fit in with an electric vehicle’s typical range of between 60 and 100 miles, running costs could work out lower than petrol or diesel alternatives.

Currently electric vehicles are exempt from BIK. The government announced a five-year ‘BIK holiday’ on electric vehicles from 2010, which means no company car tax to pay.

There can also be benefits for employers: the plug-in car grant offers up to £5,000 off the purchase price of electric cars, and they also qualify for a 100 per cent writing down allowance.

This means companies that buy cars outright can get a significant discount off the purchase price and can write off the entire value of the vehicle against profits in the first year of ownership.

It is likely that if your employer is offering an electric car there will be charging facilities at work.

The cost of charging an electric car from empty is typically between £1 and £2. A full charge usually takes between six and eight hours, and, depending on road and driving conditions should allow between 60 and 100 miles of travel.

As there is currently no BIK to pay on electric vehicles it means company car drivers can’t be taxed in the same way on free fuel for private use provided by the employer. 

Some vehicles are available that are plugged in like a battery electric vehicle, but use a petrol engine to extend the car’s range. It means they produce ultra-low CO2 emissions using electric motors in combination with efficient petrol engines.

These cars qualify for a reduced rate of BIK tax of 5 per cent – half the current lowest rate for a petrol engine car with CO2 above 75g/km.

However, changes are afoot to realign these and fully electric cars for the 2014-15 tax year, all plug-in vehicles will face BIK tax at 9 per cent, only a single percentage point discount compares with a conventional petrol car producing 95g/km.

Taking into account the typically high list price of plug-in vehicles (and remember BIK tax is paid on the full price of the vehicle, disregarding the £5,000 grant), company car tax could suddenly become rather expensive compared with the most efficient and least expensive conventional cars.

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