What incentives are available for businesses to go electric?
Fleet operators haven’t been overlooked – after all, they’re footing the bill for vehicles which are still typically more expensive to buy or lease than their petrol or diesel counterparts. So the government has introduced several tax incentives to tip the balance in favour of going electric.
Unlike a combustion engine car, businesses can deduct the full cost of buying or leasing an electric vehicle from their pre-tax profits, which reduces their tax bills. They also qualify for zero-rate Vehicle Excise Duty (or ‘road tax’), and are exempt from the £335 levy which is usually applied if the list price is £40,000 or more.
Recurring tax costs are lower too. Employers pay Class 1A National Insurance Contributions (NICs) for providing workplace perks. For cars, this is 13.8% of the taxable value, which means it’s just as heavily CO2-weighted as drivers’ Benefit-in-Kind payments. A slightly higher 15.05% rate will come in next April, aimed at raising revenue for the NHS and social care.