The story of electric cars begins far longer than we all might have thought. In 1839, a Scottish inventor named Robert Davidson created what is believed to be the world’s first electric car.
Fast forward to the 21st Century, do you remember the first time you heard about electric cars or maybe saw an example of them on screen?
Do you remember laughing at them for what the car looked like or the fact that it only went 10 miles!!!
We have definitely moved on since then!
Government Incentives for Electric Cars
The interest and sales of electric cars has increased dramatically, due to the concern for the environment. As at the end of July 2024, there were approximately 1.2 million electric cars in the UK.
The Government’s official climate change adviser has said, nearly every new car and van sold in the UK will need to be electric within just six years to meet the 2030 net zero target, so how are they providing an incentive for this?
New fully electric cars qualify for the first-year allowance, meaning 100% of the cost of the vehicle purchased can be offset against the profits of the company. VAT can also be claimed on cars that are for business use only.
Tax Benefits of Fully Electric Cars
The percentage at which a benefit in kind is taxed is based on the CO2 omissions of a vehicle. For the 23/24 tax year the benefit in kind rate is just 2% for fully electric cars. (Don’t forget, you will still need to file a P11D each year or add it to payrolling your benefits!)
If the vehicle is charged at work, there is no taxable benefit and moreover 100% of the first-year allowance is available for the cost of installing a charging point at the workplace. If the employee charges their vehicle from their home power supply, then there is a mileage allowance available at 8p per mile. The charging points can also be put through your business, and there are currently two grants you can get for installing chargepoints for electric cars at a property of your own.
Why Now Is the Time to Go Electric
With the first-year allowances and the benefit in kind percentages available, this may be the perfect time to ditch the petrol stations and embrace electric. Wouldn’t it be wonderful to start saving money as well as benefitting the environment?
Offering Electric Cars to Employees
And while we’re on the subject of savings – a little bonus point – you can also offer electric cars to your employees through the business, saving you and them money too! This would be a great saving for you but also a great perk to offer your employees.
You would lease the vehicle of their choice through a leasing company (we can recommend a company if you would like a contact!), and you would use salary sacrafice for the employee to ‘pay’ you the leasing amount each month. With salary sacrifice, the leasing amount is taken out pre-tax and NI, so the employee will pay less tax than if they went and got a car from their net wages, and you, as the employer, have the lease cost covered – but also pay less employers NI on the reduced gross salary. Win Win!
Get in Touch for Personalised Advice
Feel free to talk us about purchasing an electric car and the benefits for your specific circumstances – drop us an email on hello@pinkpigfinancials.co.uk
