Electric vehicles are not only cheaper to run day-to-day – there are funding and tax incentives that come with switching to 100% electric vehicles.
Companies that equip themselves with electric vehicles enjoy significant cost savings. So, becoming more sustainable not only makes sense from an ethical point of view; it is also a smart business decision.
For example, electric vans deliver substantial savings when compared like-for-like with petrol or diesel-powered equivalents. Businesses using these versatile vehicles could end up with money to invest elsewhere or add to their profit margin.
These savings come in a variety of ways:
A fully electric car
- Benefits in kind for directors and employees
On fully electric cars the benefits as a % of list price are :-
2020-21 0
2021-22 1
2022-23 2
The 2022-23 rate is anticipated to apply in 2023-24 and 2024-25 - Government grants
A grant of up to £2,500 might be available from 18 March 2021 on electric cars priced under £35,000. - Capital allowance
Up to 100% first year allowance is available on new cars
Charging points and charging costs
- 100% first year allowance available if installed at the workplace.
- No benefit in kind where the employer provides electricity for free.
A fully electric van
- A zero benefit in kind for directors and employees
- A plug-in van grant of up to £8,000 might be available
- Up to 100% capital allowance available
Business mileage
- Where an employer provides a fully electric car to an employee, the employer can pay 4p per mile tax free to the employee for business mileage
- Where an employee uses their own electric car, the employer can pay up to 45p per mile tax free to the employee for business mileage up to 10,000 miles, 25p thereafter
Summary
It is important to remember that the tax rules for higher and lower CO2 emission cars may continue to change, depending on any change of government and future Budget statements from the Chancellor.
If you need advice on the latest tax consequences of buying a particular vehicle, please get in touch with a member of our tax team on 01904 655202 or email enquiries@hghyork.co.uk.
