The current BIK (benefit in kind) rate for fully electric company vehicle is 2% compared to up to 37% for petrol or diesel vehicles. There is an additional 4% surcharge for diesels that do not meet key regulations.

The Polestar 2 Long Range Single Motor, which has a range of up to 400 miles, will cost a 20% taxpayer from £16 per month or around £200 per year. An equivalent petrol or diesel vehicle will cost the same taxpayer around £3,600 per year. Tax savings over the usual three-year lifetime of a top of the range model can exceed of £30,000 for a top rate taxpayer when compared to an equivalent petrol or diesel vehicle.

The compelling financial benefits of electric company vehicles will be explored in seminars being hosted by Azets on 29th February in Edinburgh and Glasgow for which you can still register. The seminar will cover an extensive range of employee issues such as employment taxes, global mobility, tax efficient remuneration, pensions and the popular salary sacrifice option. Polestar will be bringing a demonstration vehicle along to the Glasgow seminar for those interested in exploring the options.

“The BIK savings available to both the employees and businesses can be breath-taking. Given that the company car benefit in kind rates are known up to the 2027/28 tax year and the recent confirmed increase to the Scottish tax rates, there has probably never been a better time for businesses to go electric,” said Mark Pryce, partner and business tax specialist with Azets.

“With staff recruitment and retention remaining a major challenge for many sectors, providing employees with the most tax-efficient benefits packages possible has never been more important. Employees are increasingly aware of the savings they can make by choosing an electric vehicle as their company car, a trend that is encouraging more and more businesses to make the switch to electric.”