As the world becomes more environmentally conscious, many UK businesses are looking to reduce their carbon footprint. One effective way to do so is by purchasing electric vehicles (EVs) for their business use. Not only does this help the environment, but it can also provide significant tax benefits for companies. In this blog post, we’ll explore why buying an electric business car makes financial sense and the various tax benefits associated with it.
Environmental Benefits of Electric Business Cars
The first and most obvious benefit of purchasing an electric business car is the positive impact on the environment. Electric vehicles produce zero emissions, which means they have no harmful impact on the air quality. Moreover, the UK government has set ambitious targets to reduce carbon emissions and transition to cleaner energy sources. By choosing electric business cars, companies can help the UK reach these targets and reduce the carbon footprint of their business.
One example of an electric car that UK companies may consider is the Porsche Macan. It comes with a range of features, including adaptive cruise control and parking assist, which can make it a practical choice for business use. Companies interested in purchasing electric vehicles can find the Porsche Macan on Auto Trader, which offers a wide range of electric and hybrid vehicles for sale.
Tax Benefits of Electric Business Cars
In addition to the environmental benefits, electric business cars also offer significant tax savings for companies. These benefits include:
Lower Vehicle Excise Duty (VED)
The VED, commonly known as road tax, is a tax that all vehicles must pay. However, electric vehicles are exempt from VED in the first year, and subsequent years are subject to a lower rate than petrol or diesel vehicles. This can provide significant savings for companies that have a fleet of vehicles.
Capital Allowances
The UK government offers capital allowances for businesses that purchase electric vehicles. These allowances enable companies to deduct the cost of purchasing the vehicle from their taxable profits. The amount of the allowance depends on the type of vehicle and the level of emissions. Electric vehicles generally qualify for a higher rate of capital allowances than petrol or diesel vehicles.
Lower Fuel Costs
Electric vehicles are significantly cheaper to run than petrol or diesel vehicles. The cost of electricity is lower than the cost of petrol or diesel, and electric vehicles require less maintenance than traditional vehicles. This can result in significant savings for companies that have a fleet of vehicles.
Lower Company Car Tax
Company car tax is a tax that employees pay on the value of the car provided to them by their employer. Electric vehicles have significantly lower CO2 emissions than petrol or diesel vehicles, which means they are subject to a lower rate of company car tax. This can provide significant savings for both the employer and the employee.
Congestion Charges and Road Tolls
Electric vehicles are often exempt from congestion charges and road tolls. This can provide significant savings for companies that operate in areas with high levels of congestion or that require frequent travel on toll roads.
Considerations When Purchasing Electric Business Cars
Before purchasing electric business cars, there are a few considerations that companies should keep in mind:
Charging Infrastructure
Electric vehicles require charging infrastructure, which means companies need to install charging points at their premises. This can be a significant upfront cost, but the UK government offers grants to help offset this cost.
Range Anxiety
Electric vehicles have a limited range compared to petrol or diesel vehicles, which means they may not be suitable for all types of business use. Companies should consider the distance they need to travel and the availability of charging points when deciding whether to purchase electric vehicles.
Resale Value
Electric vehicles have a lower resale value than petrol or diesel vehicles. This means that companies may not recoup the full cost of the vehicle when they sell it. However, the tax savings associated with electric vehicles can offset this lower resale value.
Car Leasing
Another option for UK companies interested in purchasing electric business cars is to lease a car. Leasing can offer several advantages over buying a vehicle outright, including lower monthly payments and the ability to upgrade to newer models more frequently. Leasing also offers tax benefits for electric vehicles, as the monthly payments and associated costs can be written off as a business expense. This can help offset the higher initial cost of electric vehicles, making them a more financially viable option for businesses.
Conclusion
Purchasing electric business cars can provide significant tax benefits for companies. Not only do electric vehicles help the environment, but they also offer lower VED, capital allowances, fuel costs, company car tax, and congestion charges and road toll savings. Companies should carefully consider their business needs and the potential limitations of electric vehicles, such as charging infrastructure and range anxiety. Additionally, companies should research the different types of electric vehicles available and compare their costs and benefits to traditional petrol or diesel vehicles to make an informed decision.
Moreover, the UK government has set a target to ban the sale of new petrol and diesel cars and vans by 2030, which means electric vehicles will become more prevalent in the near future. By purchasing electric business cars now, companies can future-proof their fleet and reduce their carbon footprint.
In summary, buying an electric business car makes financial sense for UK companies, as it provides tax benefits and helps reduce the carbon footprint of their business. With the UK government’s commitment to reducing carbon emissions, electric vehicles are becoming an increasingly attractive option for businesses. Companies should carefully consider their business needs and the potential limitations of electric vehicles before making a decision.