Weybridge accountancy firm TWP is urging businesses to consider electric company vehicles before tax incentives begin to change.

The move follows renewed Government backing for the 2035 ban on the sale of new petrol and diesel vehicles, which is expected to accelerate the shift towards electric transport across the UK.

While electric vehicles still come with generous tax reliefs for businesses, accountants at TWP are advising that these may not last forever.

Andrew Goddon, Partner and Head of Taxation Services at TWP, said: “Many of our clients are surprised at how much they can save by switching to electric cars”.

“Between the lower tax bills and allowances on vehicles and charging points, it’s one of the few areas where there’s a clear financial gain. However, we don’t expect this to last forever.”

Currently, electric company cars are subject to a Benefit in Kind (BiK) tax rate of just three per cent, although it is due to rise to five per cent by the end of the 2027/28 tax year.

However, this is still much lower than the rate for petrol or diesel vehicles, which can reach as high as 37 per cent. For businesses and employees, this means substantial savings year on year.

There are also additional benefits associated with capital allowances. For example, a business can usually deduct the full cost of a qualifying electric vehicle from its profits in the year it is purchased.

Similarly, there is also allowance available for installing charging points, provided the work is done before April 2026.

Andrew added: “We’re helping clients who want to lower their tax bills and also plan sensibly for the future. Switching to electric makes sense for a lot of companies, and the current tax treatment makes it even more appealing.”

VAT rules are another factor tipping the scales in favour of electric vehicles.

If a vehicle is used solely for business purposes, and the business is VAT registered, the VAT on the purchase may be reclaimed. Charging point installations may also qualify for VAT relief.

Andrew continued: “For many of our clients, the decision to switch isn’t just about going green. They want a solution that reduces tax liabilities and lowers running costs.

“If you’re already considering changing your company vehicles, it makes sense to explore electric options while these incentives are still in place.”

TWP encourages businesses to speak directly to a qualified adviser for expert guidance.

“There are rules to follow, and not every case is the same, so it’s important to get proper advice that is tailored to the needs of your company.”

Companies interested in understanding the full tax picture around company cars should contact the team at TWP on 01932 704700.