Our Complete Guide to Electric Car Leasing for Businesses

Give businesses a compelling combination of low running costs and environmental benefits, and they’ll flock to it like gulls to seaside litter. Case in point: electric company cars. With the UK’s push towards net-zero and a phase-out of new petrol and diesel cars, EVs are rapidly becoming the go-to choice for businesses, from small companies to sole traders.

It doesn’t take a good pair of glasses to see why: company car drivers who choose electric enjoy significantly lower personal tax bills compared to those with petrol or diesel cars. Meanwhile, employers can demonstrate green credentials and save on fuel costs. Everyone’s happy, apart from the dinosaur gas-guzzling car companies, but with the supreme range of EV models today, that’s very few and far between.

In this guide, we provide an overview of electric car leasing for businesses in the UK, explaining why EVs make great business sense as a company car. We’ll cover how business leasing works in the first place, the benefits of electric car business leases, and the practical considerations you must consider before getting started.

How Does Business Electric Car Leasing Work?

Business car leasing, also known as business contract hire, is essentially a long-term rental of a vehicle by a company. Instead of buying the car outright, your business pays a fixed monthly fee to use an electric car for an agreed length of time (usually 2-4 years) and mileage limit. Once the lease term comes to a close, you hand back the vehicle in a reasonable condition and can upgrade to a new model if you wish. Thoughts of vehicle depreciation, selling it on or even MOT testing ever have to enter your mind – the leasing provider handles those risks.

One key difference between business and personal leasing is that it offers tax advantages, which we’ll discuss later on. A business lease is usually in the company’s name so approval will depend on your business’s creditworthiness. Sole traders may need to provide personal guarantees.

When leasing an electric car through your business, you may have to pay an initial rental, which is an upfront payment to reduce future monthly costs. Additionally, maintenance packages can often be added to cover servicing and tyres, should you wish to have peace of mind when it comes to keeping the vehicle condition ship-shape to avoid end-of-lease charges.

For more information, read our guide to taxing your electric company car.

Financial Benefits of Leasing an Electric Car for Business

Leasing an electric car through your company comes with a vast array of financial perks – for one, it’s very tax-efficient. Unlike purchasing, where you might tie up capital, lease payments are generally 100% deductible as a business expense for low-emission cars. This means the full cost of your monthly rentals can be offset against profits, reducing your corporation tax bill. There’s a host of other rewards to reap.

Low Benefit-In-Kind Tax

Benefit-In-Kind (BIK) tax is paid by company car drivers for the personal use of a company vehicle, which is based on the CO₂ emissions they create weighed up amongst the car’s list price. Fully electric cars, with their carbon-free exhaust pipes, enjoy the lowest BIK rates around, sitting at just 3% in the UK from April 2025 onwards. Conversely, a premium petrol-drinker can have a BIK rate as high as 37%. Would you be willing to pay over 12x more on BIK tax just to have a petrol company car?

VAT Benefits

VAT-registered companies can reclaim a sizeable portion of VAT on the lease – 50% of the lease payment, in fact. If the car was used strictly for business purposes with absolutely no private use, you could theoretically claim 100% of VAT, but with HMRC’s stringent rules on this, it’s honestly not worth the bother. In addition, 100% of the VAT on any maintenance package add-on of a lease is reclaimable, making the addition an attractive proposition. These benefits are very unique to company car leases, so make the most of them.

Corporation Tax Deduction

As we’ve already mentioned, corporation tax is completely chalked off for EV emissions, since they produce absolute zero CO₂. But to lay it out further – in practical terms, this means a £6,000-a-year lease saves you a whopping £1,500 in corporation tax at the 25% rate. Going electric isn’t just kind to the environment, but very healthy on your tax bill.

Fuel & Running Cost Savings

Of course, there are the cost-savings benefits of any electric car, running far cheaper per mile than a petrol car. According to UK government advisory rates, the electricity cost for an EV is around 9p per mile versus around 21p per mile (and climbing) for petrol. And if employees charge at home or on cheap tariffs, the cost can stoop as low as 2-5p per mile. It’s an absolute steal compared to the rising fuel rates we so often see.

Maintenance is another saver in the equation: no oil changes and fewer moving parts add up. Research shows that servicing an EV is roughly 20-30% cheaper than an equivalent petrol car over the first 3-5 years, but with a lease, you never have to worry about this in the first place. It’s just another notch under electric power’s belt.

Electric Vs Petrol/Diesel Company Cars

How do electric company cars stack up against traditional petrol or diesel one over a lease period? Let’s weigh up the numbers:

• Fuel Costs: 9p per mile on electric vs 21p per mile on petrol
• BIK Tax: 2% on electric vs 20+% on petrol
• Lease Tax Deduction: Up to 100% on electric vs up to 100% on petrol
• Maintenance Costs: ~20-30% cheaper for EVs vs petrol/diesel cars
• Refuelling Times: ~30 minutes to 80% on rapid charge for EVs Vs 5-minute fill-up for petrol/diesel cars
• CO2 Emissions: Zero exhaust emissions from EVs vs many pollutants depending on model for petrol/diesel cars

As you can see, despite a bit of planning added to the EV due to its refuelling times, electric company cars nonetheless excel in areas of taxation, running costs and environmental impact. It’s why many businesses are choosing to head in this direction, towards the future.

Charging Considerations: Workplace Vs Home Charging

Leasing a company car isn’t just about saving money. It also comes with practical considerations in daily operations. For one, many talk about “range anxiety” as an issue, but this is increasingly becoming a thing of history. We’ve recently looked at the best long-range EVs on the market, and the top 10 all go above 400 miles. The Mercedes EQS tops out at 481 miles on a single charge. It’s simply inaccurate to say that electric cars don’t have the range today.

Is it Worth Installing an Electric Charger on Business Premises?

Unlike a petrol guzzler, an electric company car differs in how and where you fuel it. Many businesses charge overnight at home, but installing workplace charging stations can be a smart move too. If your office or premises have dedicated parking, setting up a couple of EV charge points allows employees to top up during the workday. The cost of installing a standard 7kW commercial charger is usually around £700–£1,000 per unit, but the Workplace Charging Scheme can subsidise this by £350 per socket, bringing down the bill significantly. In many cases, installing it is worth it, especially if you plan to lease more EVs or if your staff plan on getting an EV themselves. There will come a day when free EV charging on premises will be a valuable bonus for those looking to work at your company, if that day hasn’t come already.

Using Public Charging Networks

For employees who travel out and about or have a long-distance client trip, the public charging network becomes important. The good news is that the UK’s infrastructure is now at over 73,000 charging points as of January 2025, including more than 14,000 rapid and ultra-rapid charger for lightning-fast top-ups. In practical terms, this means that along motorways and in most towns, an EV driver can find a charging station if they need one. Apps like Google Maps and Waze can show where chargers are located and, in the case of Zap-Map, whether they’re in use. And with RFID cards, it makes it easy to expense charging costs for business travellers.

Choosing the Right Electric Vehicle for Your Business

EVs come in all shapes and sizes today. Some businesses may even want to consider electric vans if it’s for deliveries or carrying tools. For cars, there’s quality to be found in every category. Here are some of the best company cars you can get right now:

• Electric Hatchbacks and Saloons: Tesla Model 3, Polestar 2, BMW i4, Volkswagen ID.3
• Electric SUVs and Crossovers: Kia Niro EV, Hyundai Kona, Volkswagen ID.4, Audi Q4 e-Tron, Jaguar I-Pace
• Electric Estates: MG 5 EV, Volkswagen ID.7
• Luxury and Executive EVs: Tesla Model S, Tesla Model X, Porsche Taycan, BMW i7, Mercedes EQS

Lease Your Next Electric Company Car with cars2buy

Ready to find your next electric company car? Explore the exciting range of lease deals at cars2buy, the nation’s number-one choice for hassle-free EV leasing. We’ve brought the best the country has to offer in one place, so you can compare offers, customise your search and find the perfect vehicle to fit your needs and budget. Browse our curated collection of business leases today, and you could be driving away in a brand-new model sooner than you think.