When I was younger, company cars were a real perk that many aspired to. My dad, who had to buy his own car, made do with a wedgy secondhand Austin Princess whilst other friend’s parents had brand new Cavaliers or Sierra.

It was an era where even a single letter difference in the model number, a GL rather than an L, could be the subject of joy or angst in the playground. One friend’s dad managed to score a gorgeous white Astra GTE company car.

Unfortunately, numerous tax changes over the years targeting emissions have hit company cars, especially the sportier versions. This coupled with the relatively easy availability of car finance, means that until recently having a company car was no longer the perk it was when I was younger.

The good news is that recent acceleration [pun intended] in the availability, and practicality, of Hybrid and Electric Vehicles (EVs) is restoring the company car as a real perk, especially for company directors that have full control over their package and benefits.

Personally, I switched from a diesel to a hybrid a couple of years ago for tax reasons as this reduced my Benefit in Kind (BIK) tax from around £4,500 a year to £2,500 a year, a not inconsequential saving of £2,000 a year (or £6,000 in the three years I have had the hybrid).

When I change my car again later this year, I will go full electric, probably with a Tesla which will reduce my BIK yet further, given a total saving of around £4,500 a year compared to the diesel car I had just three years ago.

Tesla’s are great cars with amazing tech, but it is the Benefit in Kind rules on full EVs that are the key reason many people, including many other financial advisers I know, are making the switch from the traditional BMW. Merc or Audi, to a Tesla and other EVs.

Put simply you can enjoy a benefit of around £500 to £1,000 per month (the typical lease cost of an EV) from your business with an exceptionally low personal income tax liability, i.e. zero percent company car tax rate for this tax year, and company car tax rates of one percent and two percent in the 2021-22 and 2022-23 tax years respectively.

This is a fantastic way of enjoying the benefits from your company without having to pay high rates of tax. But bear in mind that the tax rules around company cars can be complicated, so please check with your accountant before buying.

Whilst the normal way of providing a company car would be for your business to lease a car for you as the director, with savings interest rates currently exceptionally low, some businesses might choose to use some of their cash reserves to buy the EV outright.

In fact, one director I know has chosen to lend his business the cash to do exactly that, and better still, he can charge his business commercial rates of interest on his loan so that he is earning that interest rather than the bank or the finance company.

Whilst I’m looking at a Tesla, it’s worth pointing out that the Benefit in Kind rules doesn’t treat all EVs in the same way. Historically motorbikes and scooters have been taxed differently from company cars.

So, whilst there are now some amazing EV motorbikes and scooters, such as the Silence S01 with running costs apparently just £1 per 100 miles and a removable battery pack, the HMRC doesn’t seem to have yet changed the rules to reflect their environmental benefits or their ease of charging. So it might be best to buy these personally. However, that said, there can still be potential tax advantages for buying something like the Silence S01 via your business but it is best to first check with your accountant which works best for you.