6. June 2026

Electric Car Tax: Is the Free Ride Coming to an End?

For years, electric vehicles (EVs) have been the tax world's equivalent of a VIP pass. Low Benefit-in-Kind (BIK) rates, generous tax reliefs and exemption from Vehicle Excise Duty (VED) made them an easy choice for tax-conscious businesses.

However, the road ahead is changing. As EVs become more common, the government is gradually applying the brakes to some of the incentives. BIK rates for electric company cars are increasing slowly, and EVs are now subject to VED, ending their long-standing exemption.

Before you cancel that Tesla order, electric cars remain one of the most tax-efficient company vehicle options available. Compared with petrol and diesel alternatives, the tax savings can still be significant, while businesses may continue to benefit from favourable capital allowances.

The message is simple: the tax advantages aren't disappearing, but the era of exceptionally generous incentives is fading into the rear-view mirror. For businesses considering the switch, there are still plenty of reasons to go electric—just don't expect the taxman to stay in the passenger seat forever.