Why Does It Pay to Go Electric? Savings on Electric Company Car Tax
Drivers of electric company cars could find themselves thousands of pounds better off after this April… here’s why.
A petrol, diesel or electric company car is a valuable perk for those who have access to one, and can also provide a number of business benefits. Not only does a company-funded car offer an incentive to attract the best staff, it also helps to encourage punctual attendance, maintain corporate image and allow employees to take pride in their appearance, all while driving a better car than they could perhaps otherwise comfortably afford to do.
With a fleet of cars, your business can provide better coverage for a wider geographic spread of customers. Throw in all of the advantages of electric company cars and you’ll soon see the economic benefits for you and your staff.
In fact, until now, one of the only downsides of having a company car has been the income tax that is applied to it as a Benefit in Kind (BIK). Electric company car tax is set to change, however, with the introduction of zero income tax on fully electric company cars first registered after 6th April 2020.
How much can I save on electric company car tax?
Company vehicles that are used privately by employees are seen as a taxable benefit, or a Benefit In Kind (BIK). As with Road Tax, the amount paid in income tax depends on the car’s CO2 emissions as well as the list price or P11D.
There are 21 emissions bands, starting with 0g/km and ranging up to 165g/km or more. The higher the emissions, the higher the percentage of P11D must be paid in income tax. So, ordinarily, electric company cars are subject to lower income tax (BIK) rates than those with petrol or diesel engines.
This April sees a change in the way that a new car’s CO2 is reported – from NEDC to WLTP, which better reflects real life emissions. As a result, new electric cars will move even further down the company car tax scale, potentially saving those who drive an electric company car thousands of pounds. In fact, drivers of cars with no emissions will go from paying 16% of the car’s list value, to 0%.
As electric cars tend to have a higher list price than petrol or diesel alternatives, this is potentially a huge saving.
On top of all of this, as employers probably already know, implementing any company car scheme through salary sacrifice means that employees are paid less, therefore reducing the business’ contributions to National Insurance and income tax.
Why should I choose electric company cars for my fleet?
Aside from the income tax benefits to employees, the advantages of using an electric company car fleet are many.
Thanks to the lesser cost of electricity over petrol or diesel, electric company cars offer lower running costs. Not only can drivers charge their cars at home, if a charging point is installed at work for all those assigned with an electric company car, this can be seen as a perk and good reason to remain a loyal employee. As a business, you could be eligible for a government grant to cover the cost of installation of a charging point.
The annual road tax for cars with zero emissions remains at £0, unless the list price was above £40,000, in which case there’s currently a £325 yearly charge from years 2 to 6 of registration.
Electric company cars also benefit from free access to clean air zones (like the London Congestion Zone) which have been introduced to deter the most polluting vehicles from entering cities where the concentration of emissions has reached an all-time high.
Of course, the UK government directive is that by 2035 we should all be using electric cars, so by implementing a completely electric company car fleet now, your business will be prepared well in advance. Switching to electric also boosts your company profile, demonstrating a considerate approach to your customers and wider community, and going some way to satisfy your Environmental Policy.
Electric vehicles also offer a smoother driving experience than petrol or diesel alternatives, with no gear changes required and instant acceleration. This is a huge benefit for anyone who spends a good potion of their working day on the road. Along with the new preferential income tax rates, an electric company car seems a very attractive prospect.
How do I switch to an electric company car fleet?
Introducing an electric company car fleet to your business needn’t require a large cash outlay, and by choosing a finance option, you can keep your cash for future projects or unanticipated expenses.
With a diverse panel of lenders, offering a superb range of finance deals, Forza Finance can help to put you on the road to a completely electric company car fleet. We can often secure better interest rates than can be found at franchised dealerships.
Finance types offered include Personal Contract Purchase (PCP), Hire Purchase (With or without a final balloon) and Lease Purchase, on values from £15,000 to £3,000,000 over a choice of durations, from one to five years. This flexibility means that you’ll be able to find an agreement that will suit your business needs.
All of this can be arranged by our experienced and knowledgeable advisors, whether you need a couple of electric company cars or a whole fleet of vehicles. And if you don’t know where to start looking, our vehicle sourcing service can make recommendations from our extensive network of approved electric company car dealers.
Get in touch with Forza Finance to discover how your business can reap the rewards of an electric company car fleet and make your employees happy too.
Header image credit: https://unsplash.com/photos/black-and-silver-car-steering-wheel-YhXlYJYlr3c
