Cars are the exception to almost every general statement about capital allowances. They are excluded from the annual investment allowance and from full expensing, so the whole question is which of three writing down treatments applies, and for a company buying an electric vehicle the answer is the most generous one available anywhere in the code.
The three rates
GOV.UK sets them out directly for business cars: the full value of the car as a 100% first-year allowance, or 14% of the car's value each year as main rate allowances, having been 18% before April 2026, or 6% a year as special rate allowances. Which applies depends on the car's emissions and on when it was bought. New zero-emission cars have attracted the 100% first-year allowance, which is why an electric company car can be relieved in full in the year of purchase while a petrol equivalent is written down over many years.
Why the difference is so large
A £50,000 electric car relieved at 100% saves a main-rate company £12,500 of corporation tax in year one. The same money spent on a higher-emission car enters the special rate pool at 6%, giving £3,000 of allowance in year one and a diminishing amount thereafter, so the relief takes well over a decade to work through. This is the largest single tax difference between two otherwise similar purchases that a small company is likely to make.
The car is not the whole calculation
The capital allowance is the company's side. The director driving the car has a benefit in kind on their own tax return, calculated from the list price and the emissions, and the company pays Class 1A national insurance on it. Electric vehicles carry a much lower benefit percentage than combustion cars, which is the other half of why they are attractive, but the two effects are separate and are reported in different places. This site computes the company's tax and does not compute benefits in kind.
Questions people ask about capital allowances on electric cars
Can a company claim 100% capital allowances on an electric car?
New zero-emission cars have attracted a 100% first-year allowance, which relieves the full cost in the year of purchase. Which rate applies depends on emissions and on when the car was bought.
Do cars qualify for the annual investment allowance?
No. Cars are excluded from the annual investment allowance and from full expensing, so the treatment is a first-year allowance or the main rate or special rate pool.
What rate applies to an ordinary company car?
14% a year as main rate allowances, reduced from 18% before April 2026, or 6% a year as special rate allowances for higher-emission cars.