Is It Worth Purchasing an Electric Vehicle for my Business?
Updated: Feb 1, 2022
"How do I approach buying Company Vehicles for my business" has always been a popular question from our clients at Accountable. Perhaps more recently, spearheaded by the governments ambition of ending the sale of all petrol and diesel cars by 2030, we're seeing an increase number of clients asking "should I invest in an electric vehicle" and "what are the tax benefits of swapping to EV"?
So let's consider some of the benefits/advantages when purchasing an electric vehicle for your business!
Grants are available for the purchase of an electric vehicle. We've included the grants available for cars & vans below:
To encourage and boost the sale of electric vehicles in the UK, the government has introduced something called the 'plug in' financial grant. With this grant, you could claim a maximum of £2,500 towards the cost of an electric car.
However, there are several conditions that must be satisfied before you qualify. These are:
The car must be brand new
It must travel at least 70 miles using its electric range (emission free).
The cars CO2 emissions must be less than 50g/km
The total price of the vehicle, including any delivery fees and VAT, must be below £35,000.
All full electric cars, providing they cost less than £35,000 new, will qualify. It's worth noting however, very few hybrid vehicles will qualify as they will not have the required electric range.
2) Small Vans
A small van constitutes a vehicle with a gross weight of 2,500kg or below.
CO2 emissions must also be below 50g/km
Similarly to the car, they must be able to travel at least 60 miles fully electric (without emissions)
If your small van qualifies, you could be entitled to up to 35% of the purchase price to a maximum of £3,000.
3) Large Vans
The weight must be between 2,500kg and 3,500kg gross.
As with a small van, the CO2 emissions must be less than 50g/km and must be able to travel 60 miles on full electric.
The grant will account for 35% of the purchase price up to a maximum of £6,000.
Capital Allowances can be claimed by the business on the purchase of an electric vehicle. More details around this can be provided to you by your dedicated Accountable Accountant.
Electric Vehicle - Benefit In Kind (BIK)
Another reason to opt for an electric vehicle, besides doing your part to help the environment, is that BIK charges for an Electric Vehicle are much lower than for a petrol or diesel vehicle.
Fully electric cars attract a BIK charge rate of just 1% (2021-22). However, in the latest budget announcement it was said that this will rise to 2% for the following tax years (2022-23, 2023-24, 2024-25).
There are considerable tax benefits to investing in an electric vehicle, for both the employer and the employee. That said, every business is slightly different and as always, we would advise checking with your dedicated accountant before making any large purchase, and that includes a shiny new electric company vehicle!
If you have any further questions around electric vehicles or just wish to discuss the tax benefits or implications of purchasing a vehicle for your business, please get in touch today!