Should your company car be electric?

In the last few years, electric cars have become the frontrunner in sustainable private transport.

There are now over 300,000 electric cars on the UK’s roads, along with more than 16,000 charging stations.

With the recent fuel crisis putting further pressure on petrol and diesel, now could be the perfect time to go electric for your company vehicle. From cheaper running costs to lower taxes, here’s why the future is electric.

Pay less tax

Switching to electric vehicles means that you stand to pay considerably less tax.

When you use a company car as a limited company director, you’ll pay tax on it as a benefit-in-kind. Because this charge is based on emissions and the car’s list price, company cars are often not worth the tax charge.

With electric cars, however, the benefit-in-kind is just 1% in 2021/22, rising to 2% in the next tax year. This means as a director, you can benefit from having a company car and paying very little personal tax on it if you switch to electric.

Electric vehicles are exempt from vehicle excise duty, saving you an average of £155 per year per vehicle. If you’re operating a large fleet, this could save you thousands of pounds.

An electric car can also reduce your annual tax bill. You can claim capital allowances for company cars, with higher allowances available for those that meet certain CO2 emission standards.

Electric cars are treated as zero-emission vehicles, allowing you to deduct their full value from your profits.

Save money on running costs

Electric cars are significantly cheaper to run than their petrol or diesel counterparts. The average cost per mile of a petrol car is 15.8p, compared to just 4.9p for an electric vehicle. This is a saving of nearly 70%.

Electric cars also tend to be more reliable. The average annual upkeep on an electric vehicle is £384, almost £300 less than that of a petrol or diesel car. For larger businesses with multiple vehicles, the benefit scales.

Receive government funding

The government has pledged to ban the sale of all new petrol and diesel cars by 2030. As such, it is keen to do everything it can to strengthen the infrastructure for electric vehicles.

Under the workplace charging scheme, businesses can apply for funding towards the cost of on-site charging points.

Grants are paid in the form of vouchers which can be used to reduce the cost of installing electric vehicle charge points by up to £14,000. Application forms can be downloaded from the government website.

Avoid pollution charges

Since 2019, Transport for London has operated an Ultra Low Emission Zone.

Any vehicle entering central London is charged a fee of £12.50 unless it meets strict CO2 emission standards. This month, the zone is being extended to cover a total of 146 square miles.

The scheme has been extremely effective in reducing air pollution in the capital, and other UK cities are keen to follow suit.

A number of local councils including Bath, Bristol, Birmingham, Oxford and Manchester are planning to implement their own Clean Air Zones in the coming months.

If you or your employees regularly travel between cities, an electric car will allow you to avoid these charges.

Prove your green credentials

Ethical consumerism is at an all-time high. 81% of customers favour sustainable brands according to one study, and over 60% are willing to ditch companies who aren’t doing their bit for the environment.

Switching to an electric car shows your customers that you take their concerns seriously.

Get in touch

As petrol and diesel cars are phased out, the benefits of electric vehicles will continue to grow.

The sooner you make the switch, the sooner you can start reaping the rewards. Get in touch today for more advice on planning a future that is both profitable and sustainable.

DISCLAIMER

The information provided is of a general nature. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from an appropriate professional before you take any action or refrain from action. Whilst we endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We and our associates disclaim all warranties. The information can only provide an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.

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