After years of decline, electric company cars are leading a revival in the company car market — and the numbers speak for themselves.
Recently published statistics show that in the 2023/24 tax year, the number of people receiving a company car rose by 80,000 compared to the previous year.
From a peak of 960,000 recipients in 2015/16, numbers fell to 720,000 by 2020/21. But now they’ve climbed back to 840,000, thanks to tax incentives for cars with CO₂ emissions of 75g/km or less, especially fully electric models.
Why electric company cars are on the rise
With frozen tax thresholds, salary sacrifice schemes have become a smart way to save. Swapping part of your salary for the use of a low-emission company car can mean a substantial tax reduction.
Example:
An employee earning £120,000 sacrifices £6,000 of salary to cover the lease cost of a mid-priced electric company car. The result? Around £2,800 in combined tax and National Insurance savings.
It’s no surprise that the number of zero-emission company cars has increased sixfold since 2020/21, reaching 340,000, now 41% of all company cars.
The move to electric has also lowered the average CO₂ emissions of company cars from 71g/km to 56g/km in just one year.
Extra perks for electric drivers
Choosing a fully electric company car comes with added benefits: there’s no fuel benefit charge even if your employer provides a workplace charging point.
Meanwhile, diesel’s dominance has collapsed, from nearly 50% of company cars in 2020/21 to just 13% in 2023/24.
Act now, incentives won’t last
At present, electric company cars attract a benefit-in-kind rate of only 3%. But by 2029/30, this will increase to 9%, cutting our example taxpayer’s saving from £2,800 to about £1,000.
If you’re considering the switch, it’s worth acting sooner rather than later. You can estimate your tax cost using HMRC’s company car and fuel benefit calculator.
Thinking of going electric?
Our strategy and planning services can help you assess the benefits and choose the best option for your circumstances.