With the technology behind electric vehicles improving year on year, it’s no surprise that switching to an electric car is an increasingly enticing option for drivers. But as a business owner, it could make financial sense, as well as being a positive move for the environment. Alongside tax and grants, owning an electric vehicle provides cost reductions over the course of your ownership. When comparing running costs to a petrol or diesel car, an EV can be driven for a little as 1p per mile, compared to 8 to 10p per mile. And with few moving parts, there are less maintenance fees to worry about too. We’ve broken down the financial benefits that business owners could receive by choosing an electric vehicle over a standard motor. Read on to find out more about electric vehicles for business owners.
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Tax benefits for electric company cars
If you buy an electric vehicle to be used as a company car, you’ll enjoy 1% tax through Benefit in Kind. If the vehicle is used for personal use as well as business then benefit in kind tax must be paid. The tax rate used to be 16% for EVs, however, it was reduced to zero in April 2020, rising to 1% in April of this year and will go up to 2% from April 2022 until 2025.
The Benefit in Kind rate for higher emissions vehicles is over 30%, so an EV could earn you significant savings. EV owners are also exempt from vehicle excise duty, van benefit charge, fuel benefit charge and fuel duty, as well as road tax.
Government grants towards EVs
If you buy a brand new electric vehicle for use for work, you could be entitled to the government’s low-emission vehicles plug-in grant which covers cars, vans, mopeds and motorcycles, trucks and taxis. The maximum grant for cars is £2,500 while the pay-out for vans and trucks can vary between £3,000 and £16,000.
This grant is given to select dealerships and manufacturers, so you’ll need to locate the brands under the scheme in order to be eligible. However, there’s a broad range of well-known vehicle manufacturers to choose from, with models such as the BMW i3, Fiat 500e, Kia e-Niro and Renault ZOE included.
So, what about the financial benefits for those driving to and from work in an urban area? In London, electric vehicle owners are exempt from the congestion charge, which saves them £15 a day and could wind up saving them around £300 per month. There’s also a saving of £12.50 a day as part of the Ultra Low Emission Zone, or ULEZ, which are planned to be rolled out in other cities including Birmingham, Manchester, Bath, Oxford and Bristol.
Workplace charging scheme
While many business owners are sold on the concept of owning an EV, the reality of needing to charge it can be a sticking point. To combat this and encourage people to switch to electric vehicles, they introduced two schemes. These are the Electric Vehicle Homecharge Scheme, which offers up to 75% of the cost of installing an EV charging point in your home, and the Workplace Charging Scheme which provides vouchers towards the cost of buying and installing charge points at your business premises.
There are many advantages to owning an electric vehicle as a business owner. The running costs are typically much lower, costing a fraction to charge your car compared to what you’d spend on fuel, and there are a range of incentives and tax breaks to take advantage of to make savings on running the vehicle too. On top of this, there’s the environmental impact of EVs, with a single electric car saving around 1.5 million grams of CO2.
Here at the Car Guide we are always working hard to provide lots of info to help people get the right car in the right way for them or their business. As well as our car checker we will also be launching a buying comparison platform where you can check different purchase methods for you chosen car.
Frequently Asked Questions
- Reduces emission
- Require less car maintenance
- Are energy efficient
- At the moment are still quite expensive
- Limited battery range, although this is getting better with new technology
- ‘Fueling’ takes longer