Favourable tax breaks have led to a 76% surge in electric vehicle (EV) adoption, with the amount nearly doubling from 2022 to 220,000 company EVs in 2023. The total number of company cars reached 760,000 in 2023, an increase of 40,000 from the previous year. This is a notable rise from the steady decline since 2015, when there were 960,000 company vehicles, dropping to 720,000 in 2020/21.
By 2018/19, there were 870,000 company cars, with just 1% being EVs. Now, EVs account for almost a third of all company vehicles. Enhanced reliability for long distances and expanding charging points nationwide have contributed to this rise.
Tax charges, however, will increase by 1% annually until 2028, which could cause a decline in company vehicle numbers. Starting 1 April 2025, road tax will apply to all EVs, with new registrations paying the lowest rate, and older EVs and hybrids paying the standard rate, which is currently £190 but is subject to change. This is projected to generate £985 million in the first year, doubling to £1.59 billion by 2027/28. Electric vans will be taxed as regular light goods vehicles.
HMRC has updated its guidance on the tax treatment of charging company EVs at home. The charging costs are now treated as a tax-free benefit, a change from the previous stance where reimbursements were taxable.
The latest guidance is detailed in HMRC manual EIM23900, reflecting the revised interpretation regarding home charging of company EVs, as updated last October.
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