Why full-electric vehicles make sense for fleets and drivers.

Full-electric vehicles, no matter when they were registered, are now subject to a 0% BiK rate for the 2020/21 tax year – previously 16%.

From 2021/22, this will increase to 1% and rates would then be frozen at 2% from 2022/23 up to 2024/25. There’s no doubt that with these rates, choosing an EV could save company drivers thousands over diesel-powered alternatives.

The Worldwide Harmonised Light Vehicle Test Procedure (WLTP) came into force in April 2020, which explains the difference in rates between cars first registered before 6 April 2020 and those first registered from 6 April 2020. The Government’s £3,000 plug-in car grant will carry on to the 2022/23 tax year – and £500 million has been pledged over the next five years to support the rollout of rapid charge points for EVs; the idea being that EV drivers will never be more than 30 miles from a rapid charging station. A Rapid Charging Fund is also included in this legislation, which will help businesses with the cost of connecting fast charge points to the grid.



EVs: These are vehicles that run solely on electric power, usually a rechargeable battery, rather than an internal combustion engine. They produce zero emissions and are therefore eligible for the 0% BiK rate in 2020/21 and BiK discounts beyond. HEVs: HEV means Hybrid Electric Vehicle, powered by an internal combustion engine (ICE) that is assisted by an electric motor, with a small rechargeable battery. In turn, this is charged by regenerative braking or the petrol engine. HEVs switch between the two power sources but can also be driven in electric-only mode for short distances.

PHEVs: Plug-in hybrid vehicles typically work in a similar way to HEVs – being equipped with both an internal combustion engine and an electric motor. The key difference is that a PHEV has a plug socket so its battery can be charged via an external power source and they tend to have much larger battery packs. As such, a PHEV has a longer electric-only range and tends to offer greater efficiency than an HEV.


Where fuel is provided by an employer for private mileage, there is a charge to pay by applying the appropriate percentage to the car fuel benefit charge multiplier, which is £24,500 for the 2020/21 tax year. This could prove to be a very expensive charge, unless the employee’s car is a low CO2 model.

The good news is that if a full EV is chosen, electricity is not regarded as a fuel for car fuel benefit purposes and as such if you charge at work, there is no benefit charge.

EV-driving employees, now also benefit from the Advisory Electricity Rate (AER) of 4 pence per mile.

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