The number of electric vehicles on the road continues to grow at an ever-faster pace as businesses and individuals seek out environmentally friendly cars and vans.
With the world’s attention focused on the future of the planet, as world leaders reach an agreement at COP26, Hereford and Ludlow accountants Thorne Widgery say that more businesses need to look at the cost and tax benefits of going green for their employees.
Company car tax, which is charged via the Benefits in Kind system, is largely focused on the gases and particulates a vehicle emits – with the worst polluters facing much costlier rates.
New stricter rules on emissions have meant that most vehicles now face higher taxation than in previous years, whereas pure electric vehicles only face a one per cent rate currently – rising to two per cent from 6 April 2022.
Daniel Crowther, CEO at Thorne Widgery, said: “The electric vehicle revolution is well underway and it is no surprise given the incentives on offer to businesses and their employees.
“Not only is company car tax significantly less for pure electric vehicles, but owners pay no vehicle excise duty on cars costing less than £40,000. They generally have lower running and servicing costs as well and, perhaps most importantly, a reduced impact on the environment.
“The most recent climate talks have highlighted the need for the whole of humanity to act on rising temperatures and switching to an electric vehicle is certainly one way of reducing harmful emissions – especially as renewables take over a greater share of energy production.”
Daniel added that businesses could also benefit from tax relief on the purchase of new electric vehicles through capital allowances, which offsets costs against profits to reduce the amount of Corporation Tax a business pays. In fact, expenditure on an electric vehicle bought after April 2021 is entitled to a 100 per cent First Year Allowance.
“Alongside the lower rates of tax and the reliefs that are available, businesses can also claim funding for the installation of charging points within their business,” added Daniel.
Given that the sale of all new pure petrol and diesel engine cars will be banned by 2030 and the Government is introducing new laws to make it compulsory to add charge points to new homes and offices, Daniel said that early adopters are likely to be the biggest winners from the current boom in funding and support.
Thorne Widgery is ready to help businesses go electric and is offering advice to a wide range of sectors. You can find out more by contacting us.