There are so many positives to choosing an electric vehicle as your company car and an increasing number of them are financial.
The major cost of a company car to the employee is the fact that the car attracts benefit-in-kind (BIK) tax. As this tax is based on CO2 emissions, traditional fuelled vehicles have seen significant increases in taxation as successive governments have sought to penalise the most polluting cars with the highest emissions. At the same time however, the government is constantly looking to incentivise businesses and employees to adopt greener, cleaner vehicles which is why choosing an alternative fuel vehicle, especially an electric vehicle, is so attractive right now.
Let’s take a look at the numbers.
For the tax year 2020/21 the BIK tax for electric vehicles is zero – that’s right, nothing, so no tax liability at all! In 2021/22 it will only be 1% and by 2022/23 only 2%. Compare that to the maximum that some traditional fuelled vehicles can cost their drivers which is a whopping 37%!!
Electric vehicles are also exempt from Vehicle Excise Duty (VED), or road tax to most of us, other than the element linked to the value of the vehicle.
Below is a typical illustration that demonstrates the level of tax savings that can be made:
|E-Golf||Golf 1.6 Tdi Match|
|VED Road Tax (Year 1)||£0||£150|
|VED Road Tax (Year 2)||£0||£150|
|VED Road Tax (Year 3)||£0||£150|
|BIK Company Car Tax 20/21||£0||£2,870|
|BIK Company Car Tax 21/22||£124||£2,870|
|BIK Company Car Tax 22/23||£248||£2,870|
So, if you are a 40% income taxpayer, by choosing an electric car you could save £8,688 in tax alone over 3 years.
Obviously, as electric vehicles are not running on petrol or diesel, there is also no fuel duty or fuel benefit charge and the overall running costs of the electric vehicle are significantly lower.
Take a look at the Go Ultra Low website which allows you to calculate the cost savings that can be made by making a journey in an electric vehicle rather than a petrol or diesel equivalent.
For the company, they also have to pay National Insurance contributions which are based on the vehicle’s BIK tax band and its value, so they stand to gain too.
Due to the fact that electric vehicles have fewer moving parts than their petrol or diesel equivalents, servicing costs also tend to be lower, estimates are the savings that are available, depending on the model, are 20-30% compared to equivalent petrol or diesel vehicles.
Also from a business perspective, the government also allows electric vehicles to qualify for first year allowance with regards to enhanced capital allowances, meaning that the full cost of the vehicle can be deducted from profits before tax, subject to funding method, please contact us for more details.
What about charging?
There are more than 15,000 public car charging points across the UK and this number is increasing on an almost daily basis. There are also apps available, such as Zap-Map, that allow you to see at a glance your nearest point and to plan your journey.
The Office of Low Emission Vehicles (OLEV) provides grant funding of up to 75% (capped at £500 including VAT) towards the cost of installing a domestic charging station in your home.
The Workplace Charging Scheme also enables businesses to claim a grant of up to £500 per charging socket (up to 20 sockets) towards the cost of installing EV charge points for their employees at work.
Some local authorities have either already introduced or are considering introducing Clean Air Zones. Some of these, including London and Birmingham, will charge private cars that do not meet strict emissions levels. The Ultra Low Emission Zone (ULEZ) in London charges traditional fuel vehicles £12.50 per day for vehicles entering the zone at any time.
Obviously environmental factors are a huge element to take into account when considering an electric vehicle. With zero tailpipe emissions, so no CO2 and no nitrogen oxides, electric car owners can genuinely point to the positive impact that they are making to clean up the air for everyone.
One final big benefit that electric car drivers talk a lot about is the improved driving experience, thanks to the fact that the vehicles are so much quieter and have instant torque.
If you are considering an electric vehicle, talk to the experts at Bluestone Vehicles.
01924 790 660
Bluestone Vehicles is a trading style of Bluestone Leasing Limited (registered in England & Wales no. 02519389 and registered office at Lakeside House, Navigation Court, Wakefield WF2 7BJ) is authorised & regulated by the Financial Conduct Authority FRN no. 663701. Bluestone Leasing Limited are a credit broker not a lender. ICO Data Protection Registration no is Z6897676 © copyright Bluestone Leasing Ltd. Figures shown are based on a representative example and are not guaranteed. The product quoted for is only one of a number of products which may be available and which may be more or less suitable, depending on your needs and circumstances. Finance is arranged subject to status and terms and conditions. Figures shown are for illustrative purposes only using information available at the time of writing. BIK Company Car Tax is based on vehicle type, the P11D £ value and official NEDC vehicle CO2 emissions. This figure is obtained from official EU test data, intended for comparisons between vehicles and may not reflect real driving results. *Tax payable is shown for each financial year from 2019