Access your free guide Giving company directors clarity on the tax implications of leasing or buying an EV via their business.

Whether you plan on leasing or buying an EV outright via your business, it’s important you understand the potential tax implications and make an informed decision. Download our free guide today and electrify with confidence.

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What are my options?

Company directors often choose between leasing (typically Business Contract Hire) or outright purchase. Below is a snapshot of the potential tax implications, plus we've highlighted some key benefits and drawbacks for both.

Everyone’s tax affairs are different, though. So please consult with your relevant financial services providers, for professional advice, to establish how each method might impact you and your company's tax position, and which option would be most appropriate to your circumstances.

Your business leases the vehicle for a fixed period for a monthly cost plus an amount up-front (the initial rental), handing it back at the end of the lease.

Advantages

No risk to the company if the vehicle depreciates
You can change your car regularly (at the end of the lease term)
Company cash isn’t tied up in an asset
Predictable monthly payments with minimal up-front payment needed
Reduces your company's Corporation Tax liability

Disadvantages

You don’t own the asset (the car)
If you want to return the vehicle before the end of the lease, early termination fees apply
If you exceed the mileage limit, you’ll need to pay an excess mileage charge
If you damage the vehicle (beyond deemed fair wear and tear), you’ll be charged for the repair costs

Purchasing an EV outright via your business means your company owns the asset.

Advantages

You can defer a significant value of Corporation Tax in year one
You own the vehicle, and it sits as an asset on your balance sheet
You can sell the vehicle at any time, and you’re not bound by a third-party contract (unless you’re financing the vehicle)
There’s no mileage limit or wear and tear costs – but these factors will reduce the future value of the vehicle if you come to sell it

Disadvantages

You can defer Corporation Tax but the net savings across the life of the vehicle are usually tax-neutral – whereas Corporation Tax savings are possible via a BCH lease
You’re responsible for the residual value of the vehicle
Cash could be tied up in an asset when better used for other business activities
In almost all cases, the VAT will probably be a cost; its recovery isn’t guaranteed

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Alternatively, you can explore the Škoda range

There's a Škoda to meet your every need. Discover our range and find out why Škoda was crowned Fleet Manufacturer of the Year at the Great British Fleet Awards 2025.

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Images for illustration purposes only.

^*Figures shown are for comparability purposes; only compare electric range figures with other vehicles tested to the same technical procedures. These figures may not reflect real life driving results, which will depend upon a number of factors including the accessories fitted (post-registration), variations in weather, driving styles, vehicle load and the starting charge of the battery. Figures for battery electric vehicles were obtained after the battery had been fully charged. Battery electric vehicles require mains electricity for charging. Data correct at 17 March 2025. Choice of wheels and other options may affect consumption and range data.

^{^}No ownership option. Business users only. Contract Hire agreement. Excess mileage charges apply. Fair wear and tear charges may apply. All prices exclude VAT at 20%. 18s+. Subject to status. Offer available for vehicles ordered by 30 June 2025 from participating Retailers. Indemnities may be required. May be varied or withdrawn at any time. Škoda Financial Services.