Benefit-in-Kind (BIK) tax for electric vehicles is to be kept low in order to encourage growth in EV take-up by company car drivers.

In his much-anticipated Autumn Statement last month, the Chancellor Jeremy Hunt confirmed that the BIK rate would increase, but only by 1% for three years each year from 2025.

The current BIK rate for a pure EV is 2% and will remain the same until April 2025. By the tax year 2027/28 it will stand at 5%. Drivers of company cars pay a tax each year based on the CO2 emissions of their vehicle. Employees with pure EVs or hybrids pay significantly lower BIK rates than ICE vehicles.

“We have been strongly expressing that the position of EVs in the UK fleet sector remains at a relatively early stage of adoption and the increases in company car taxation, of 1% percent per year, seems well-judged to us at first glance,” said Paul Hollick, chair of the Association of Fleet professionals (AFP).

"Crucially, they will allow fleet decision makers to plan for the second half of the decade as they continue the process of electrification. This is something for which we have been campaigning in conjunction with BVRLA and it is to be welcomed."

According to Ashley Barnett, head of fleet consultancy at Lex Autolease, the publication of company car rates beyond 2025 "reaffirms" the Government’s commitment towards a greener future. Barnett believes it gives decision makers the clarity they need to accelerate their transition towards EVs.

"Fleet replacements typically operate in four-year-cycles and today’s announcement paves the way for future purchasing decisions – giving them the confidence they need to commit to a long-term sustainability plan”, said Barnett.

“With longer lead times from manufacturers delaying the delivery of many vehicles, having clarity beyond 2025 is a major boost for future electric fleet decision making.”