With increasing pressure to meet ambitious climate change targets, the Government have introduced incentives for businesses to help increase the number of electric vehicles on the road, helping to meet those targets. This means there has never been a better time to switch your fleet over to electric vehicles.
One of the main incentives is the introduction of new tax bands for zero emission, 100% electric cars as well as for plug in hybrids and other electric vehicles. These changes will come into effect in 2020/2021 and mean that 100% electric cars will pay no company car tax in 2020/21, 1% in 2021/22 and 2% in 2022/23.
For the cars that emit 1-50g of CO2/km, there are also changes to tax. There will be five additional bands for these vehicles to be introduced from 2020/21, with the greatest benefits seen for those that can drive the furthest with zero harmful emissions.
When you purchase company vehicles, you are able to claim capital allowances, allowing you to deduct the cost of the purchased vehicles from your profits before you pay tax. The amount you can claim is linked to the CO2 emissions of the car. If you purchased cars between April 2015 and April 2018, you can claim the full value if the CO2 emissions are 75g/km or less.
From April 2018, you will only be able to claim the full value of the car if the emissions level is 50g/km or less. The full breakdown of capital allowances can be found here.
Benefit In Kind and National Insurance
Both Benefit In Kind and Class 1A National Insurance contributions are linked to the CO2 emissions of the company car, as well as it’s P11D (purchase cost). Therefore, the lower the CO2 emissions, the greater the benefit for both you and your employees who use their company car for personal use.
Vehicle Excise Duty
Another incentive to help businesses and drivers choose the most environmentally friendly vehicles is that purely electric vehicles do not have to pay Vehicle Excise Duty. For cars that emit less than 75g/km, there is a reduction on road tax for the first year. Both of these incentives deliver additional savings to your business when switching your fleet over to electric vehicles.
For more information on how we can help you to switch your fleet over to electric vehicles, get in touch.