At Lease Electric, we support businesses across the UK with the transition to electric vehicles. Through our trusted panel of funders and access to EVs from all leading UK manufacturers, we make it simple to introduce electric company cars, manage fleet requirements, and implement EV salary sacrifice schemes.
Whether you’re completely new to company cars or have had one for years, questions around tax, charging, and selecting the right vehicle are always common. In this guide, the Lease Electric team answers the most frequently asked questions to help you better understand company cars and how they work.
This guide covers:
Company Cars – General Overview
Company Car, Car Allowance or Salary Sacrifice
What to consider when going electric
Company Cars - General Overview
What is a Company Car?
A company car is a vehicle provided by an employer to an employee. It is owned or leased by the business and supplied primarily for work purposes, with personal use often included as an additional benefit.
How do company cars work?
The employer purchases or leases the vehicle and provides it to the employee. Costs such as insurance, servicing, maintenance, and often breakdown cover are typically covered by the business.
Company cars are classed as a non-cash benefit, which means they are usually subject to Benefit-in-Kind (BiK) tax.
Who qualifies for a company car?
Eligibility depends on your employer and the benefits they provide. Company cars are commonly offered to employees who travel regularly for work, such as sales representatives or field-based teams. They are also often provided as a benefit to managers or senior employees.
Can I choose my own company car?
In many businesses, you can choose your company car, usually from an approved vehicle list. Your choice may depend on your job level, allowance, and company policy.
In some organisations, vehicles are assigned and there is no option to choose. Ultimately, whether you can select your car or not is determined by your employer.
What are the Benefits of having a company car?
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No large upfront cost – You do not buy the vehicle yourself.
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Maintenance included – Servicing, repairs, and MOT are usually covered by the employer.
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Insurance arranged – Company insurance is typically included.
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Reliable, newer vehicles – Company cars are often new or nearly new models.
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Convenient for business travel – Ideal for employees who travel regularly for work, without using their own vehicle.
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Fixed and predictable costs – Most major vehicle costs are managed by the employer.
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Potential tax advantages (especially EVs) – Electric company cars can offer lower Benefit-in-Kind (BiK) tax rates compare to petrol or diesel vehicles.
What is the most popular Company Car?
At Lease Electric, 2025 saw the Polestar 4 become the most popular company car, followed by:
Company Cars - Tax
Are Company Cars Taxable?
Yes. Company cars are classed by HMRC as a non-cash benefit and are therefore taxable. Employees who receive a company car must pay Company Car Tax, also known as Benefit-in-Kind (BiK).
What is Benefit-in-Kind Tax?
Benefit-in-Kind (BiK) is the taxable value assigned to a non-cash benefit provided to an employee. This can include a company car, private medical insurance, or a fuel card.
As these benefits are not paid as direct salary, HMRC applies specific calculations to determine how much tax is payable.
How much Company Car Tax (Benefit-in-Kind) will I pay on a Company Car?
The amount of company car tax you pay depends on the vehicle’s CO₂ emissions, P11D value, and your personal tax rate.
BiK rates are set by the Government and can change each tax year. The amount you pay will also change if you move into a different income tax band.
For example, if you receive a company car as a 20% taxpayer and later move into the 40% tax bracket, the tax payable on your Benefit-in-Kind will increase accordingly.
The below caluclator is to be used as a guide only.
Use by searching your EV, or entering your vehicles P11D Value and BiK Percentage Manually.
How do you Calculate Company Car Tax?
Company Car Tax, also known as Benefit-in-Kind (BiK), is calculated using the following formula:
P11D Value × Benefit-in-Kind % × Your Income Tax Rate = Annual BiK
Annual BiK ÷ 12 = Monthly BiK
The P11D value is the list price of the vehicle (including options and VAT). The BiK percentage is determined by the vehicle’s CO₂ emissions (EVs benefit from significantly lower rates), and your tax rate will depend on whether you are a 20%, 40% or 45% taxpayer. To find your vehicles appropriate BiK perentage, use our BiK table.
How do I pay Company Car Tax?
Unlike Vehicle Excise Duty (previously known as road tax) on a personal vehicle, Company Car Tax (BiK) is collected through PAYE.
When you receive a company car, your employer reports the benefit to HMRC. HMRC then adjusts your tax code to reflect the value of the benefit, and the tax is automatically deducted from your salary each month.
We always advise employees to also notify HMRC when they receive a company car, including the make, model and P11D value, to avoid delays or unexpected backdated tax adjustments.
Using a Company Car
Can I use my Company Car for Personal Trips?
In most cases, yes. Many employers allow personal use, but this is usually treated as a taxable benefit. Always check your company’s policy and speak to HR or your Senior Team to confirm.
Who pays for the charge or fuel in a Company Car?
This depends on your employer.
Some businesses reimburse business mileage, others provide a charge or fuel card.
Personal charge or fuel is usually the responsibility of the employee unless a fuel benefit is provided (which may increase your BiK liability).
What happens if I damage my Company Car?
Any damage should be reported to your employer as soon as possible. Repairs are typically covered under the company’s insurance policy, although an excess may apply depending on company rules.
Procedures vary by business. You may be asked to submit a detailed email or complete an incident report form.
We always recommend:
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Taking clear photos of any damage
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Recording what happened
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Collecting contact and insurance details from anyone involved
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Taking witness details where possible
Who pay to Service or MOT my Company Car?
In most cases, the employer covers servicing, maintenance and MOT costs, particularly if the vehicle is leased through a company scheme, some may request you book servicing and maintenace directly with approved providers.
Always check your internal policy and confirm with HR, your Fleet Manager or Senior Team.
If you have a company car through Lease Electric, Funder Servicing, Maitnenace, Tyres and Breakdown Contact Details can be found here:
What happens if my Company Car has a flat tyre?
Most company vehicles include breakdown cover. You should follow your company’s process or contact the breakdown provider directly.
Tyre repair or replacement may be included depending on your agreement, so it is important to check your policy.
If you have a company car through Lease Electric, Funder Servicing, Maitnenace, Tyres and Breakdown Contact Details can be found here:
Can I take my Company Car abroad?
This is possible in some cases, but you must obtain permission from your employer first. Additional insurance or documentation may be required before travelling.
Who can drive my Company Car?
Typically, only the named employee is insured to drive the vehicle. Some employers allow additional drivers (such as a spouse), but this must be formally approved and insured.
Are there mileage limits for Company Cars?
Yes. Most leased company vehicles have agreed annual mileage limits. Exceeding this allowance may result in additional charges at the end of the contract.
Always check your agreement with your Senior Team or Fleet Manager so you fully understand your mileage limits.
It’s also important to record your mileage each year with the relevant person in your business. This allows proper planning and avoids unexpected charges if you are likely to exceed your agreed allowance.
Alternatives to Company Cars
What is a Car Allowance?
A car allowance is a fixed monthly payment provided by an employer to help cover the cost of using your own vehicle for work.
The employee is responsible for sourcing the vehicle and covering all associated costs, including insurance, servicing, tax and fuel.
What is EV Salary Sacrifice?
EV Salary Sacrifice allows employees to lease an electric vehicle through their employer using part of their gross salary.
Payments are deducted before tax and National Insurance, which can make it a highly cost-effective option. Insurance, servicing, maintenance and road tax are typically included in one fixed monthly cost.
EV Salary Sacrifice is a popular choice for those who recieve a Car Allowance and those searching for a new car.
Are Company Cars better than EV Salary Sacrifice?
This depends entirely on your circumstances.
A company car is fully provided and managed by your employer, making it simple and convenient.
EV Salary Sacrifice often provides greater choice and can offer tax efficiencies. It is commonly used by employees who do not receive a company car, those who take a car allowance, or those simply looking for an affordable personal vehicle.
The right option depends on your tax position, job role, personal preference and what your employer offers.
Electric Company Car
How do I choose an Electric Company Car?
If your employer allows you to choose your company car (provided it is electric), or you are considering switching to an EV, it can initially feel overwhelming, especially if you are used to petrol or diesel vehicles.
You should still consider the usual factors:
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How much space you need
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Preferred body style (SUV, hatchback, saloon)
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Brand preference
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What you currently drive
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Number of seats required
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Budget
However, moving to electric adds a few additional considerations:
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Your annual mileage
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Your typical daily driving distance
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Your longest regular journey
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Whether you mainly drive motorway or urban miles
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Whether the vehicle is parked at home overnight (for home charging)
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Whether workplace charging is available
Answering these questions allows Lease Electric's EV Leasing Consultants to recommend the most suitable vehicles for your lifestyle.
Will my Electric Company Car have enough Range?
One of the most common concerns we hear is “Will I have enough range?”
In reality, most UK car journeys are under 100 miles. Many modern EVs comfortably achieve 250–350 miles of real-world range, with newer models continuing to improve.
Upcoming models such as the BMW iX3, Mercedes CLA and Volvo EX60 are pushing close to the 500-mile WLTP range mark.
For many drivers, this means you could complete an entire week of driving before needing to recharge.
Choosing the right EV for your needs is important, just like selecting a petrol or diesel vehicle with good fuel efficiency. Driving style also impacts efficiency, particularly motorway speeds and aggressive acceleration.
Where can I charge my Company Car?
If home or workplace charging is not available, or you need to charge whilst travelling, we recommend Zapmap. Their app and online map provide access to thousands of UK charging locations.
If your company provides a charge card (similar to a fuel card), check whether it works across all networks or only selected providers.
Can I have a home charger for my Company Car?
Yes. Home charging is typically the most cost-effective way to charge an EV, especially when using off-peak or dedicated EV tariffs.
Some companies install home charge points and use software such as Allstar to separate business and personal charging. Business charging costs are then billed directly to the employer or reimbursed to the employee.
Lease Electric's Home Charging Solution
Company Cars - Businesses
What are the benefits to providing employees with Company Cars?
Providing company cars offers several business advantages:
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Attracting and retaining talent
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Supporting employees who travel regularly
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Enhancing brand visibility with liveried vehicles
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Meeting duty of care obligations, and reducing grey fleet risk
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Budget certainty through fixed monthly leasing
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Tax efficiencies, particularly with EVs
- Supporting ESG and sustainability objectives
What Grants are avaialble for Electric Cars and Vans?
Grant availability changes, but businesses may be eligible for:
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Electric Car Grant - Reduce the price of qualifying electric cars
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Plug-in Van Grant (PiVG) – Reduces the purchase price of qualifying electric vans
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Workplace Charging Scheme (WCS) – Provides funding towards workplace charge point installation (available until 31st March 2026)
Government guidance should always be checked, as eligibility and funding levels are updated periodically.
Charging Grants - Ending Soon.
Can we install charge points in the company car park?
Yes. Businesses can install EV charge points for employees and fleet vehicles.
Installation should be completed by an approved installer. Funding may be available depending on eligibility and location.
The Lease Electric team can introduce you to trusted installation partners to support this process.
Can we install charge points at Employees Homes?
Yes. Businesses can install home charge points and use software such as Allstar, to separate business and personal charging.
Business charging costs are billed to the employer directly or reimbursed to the employee.
Home charge points are typically owned by the company and treated as a business asset, meaning they can sit on the balance sheet. Many organisations also utilise government schemes to reduce installation costs.
The Lease Electric team can introduce you to trusted installation partners to support this process.
Can we provide Charge Cards to Employees?
Yes. Similar to fuel cards for petrol or diesel vehicles, EV charge cards and apps are widely available, including:
bp Supercharge Card
Shell EV Card
Zapmap - Business
Can we provide Salary Sacrifice as well as Company Cars?
Yes. EV Salary Sacrifice is designed to complement, not replace, company cars.
It can be offered to employees who do not receive a company car, those who take a car allowance, or employees looking for a cost-effective personal vehicle.
Many businesses now offer EV Salary Sacrifice alongside their existing company car schemes as part of a wider employee benefits strategy.