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Electric cars and your business: what you need to know

GoCardless
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Last editedMay 20222 min read

Recent changes in how the government assesses the tax due on road vehicles have made using electric cars for company purposes a lot more attractive. An electric company car with low emissions now receives huge exemptions compared to petrol and diesel vehicles.

The exemptions are part of the government's plan to persuade more road users to go green. The best electric company cars can provide other benefits and be better for the environment. They also have lower running costs, require less maintenance and retain their resale value better than petrol and diesel vehicles.

Let's dive deeper into how an electric company car can benefit your business.

UK vehicle tax for company cars

The tax due on company cars has previously been calculated according to two main criteria. These are the cost of the vehicle itself and the UK tax bracket of the driver, according to how much they earn. Diesel cars also had a third criterion, with their nitrogen oxide emissions incurring an additional tax surcharge.

The amount of carbon dioxide emitted from a vehicle's exhaust is factored into how much a car is taxed. This massively benefits electric company cars that emit much lower amounts of CO2.

Whatever tax bracket you fall in and regardless of the price of the vehicle, the tax due on the car will always be significantly lower if you drive a low emissions electric company car.

Benefits of electric company cars

There are numerous benefits to going electric for your company car needs. On top of the business tax exemptions mentioned above, electric vehicles are also exempt from road tax, vehicle excise duty, van benefit charge, fuel benefit charge and fuel duty.

There are other major advantages you can benefit from by switching your company from petrol or diesel to electric. These benefits include:

  1. Government plug-in grants

  2. Congestion charge exemption

  3. Workplace charging scheme

Government plug-in grants

The government has a plug-in grant for low-emission vehicles from selected dealerships and manufacturers. It covers cars, vans, mopeds and motorcycles, and trucks and taxis. The maximum grant for cars is £2,500, while the grant for vans and trucks can be anywhere between £3,000 and £16,000.

Congestion charge exemption

Electric vehicle drivers are exempt from the congestion charge in London. That saves £15 per day and £300 per month if you drive into the capital every day from Monday to Friday. Similar charges for non-electric vehicles will also be coming to a host of other British cities in 2022 as part of the Ultra Low Emission Zone scheme. These cities include Oxford, Manchester, Bristol, Bradford, Newcastle, Liverpool and Sheffield in England, and Edinburgh, Glasgow, Aberdeen and Dundee in Scotland.

Workplace charging scheme

If you will need to charge your vehicle during work hours, then the government's Workplace Charging Scheme offers vouchers towards the cost of buying and installing charge points at your business premises.

Leasing an electric company car

Leasing an electric company car may be the best option for many businesses. It allows you to bypass the high initial cost associated with electric cars, while also avoiding the problem of depreciation. It also allows flexibility - you could change the model of the vehicle after a certain period and expand or decrease the number of cars held by your company in total over time.

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