Electric vehicle company car tax changes introduced in April 2020 dramatically shifted the appeal of EVs. From this, it was announced in early February that the UK government will ban the sale of new petrol, diesel and hybrid vehicles from 2035. Fifteen years seems like a long time but you can almost guarantee that 2035 will arrive sooner than we feel it will. In fact, this was brought forward from the original date by five years. This means that if we stick to that date, you can expect the majority of new cars sold to be electric. That’s a long way from the current 2.7 percent of sales.
Why isn’t everyone switching to electric then?
What holds most people back from switching is the initial cost. The choice and supply of second hand electric cars is thin. Even though the price gap between electric and petrol / diesel models has narrowed, brand new electric vehicles are comparatively expensive to buy. Added to this, not everyone likes to buy new cars, especially because of the worry about the depreciation value.
There is potentially, however, something of a financial game-changer for driving an electric car. Allowing you to save between 32 – 42 percent of the monthly cost of getting behind the wheel. The key to this is salary sacrifice. The same system many employers use for pension contributions, cycle to work schemes, and childcare vouchers. This scheme allows workers to effectively pay tax-free.
How does it work?
It’s a fairly simple concept, you opt to forgo a certain chunk of your salary and your employer pays that into your choice of benefit scheme instead. This saves you both national insurance and income tax. Which is 32 percent for a basic rate taxpayer and 42 percent for a higher rate taxpayer.
So, what does this have to do with EVs? A special exemption was put in place for ultra-low emission vehicles to encourage motorists to swap their petrol and diesel cars for electric ones. This basically means that the government theoretically has no problem with your employer allowing you to pay for an electric car from untaxed income through salary sacrifice.
Why haven’t I heard of this before?
It all sounds too good to be true really doesn’t it? We bet that you’re starting to kick yourself for not knowing this in the past years. However, there was previously a ‘catch’ – and most likely the main reason this didn’t catch on. This saving is judged to be what’s known as a Benefit in Kind (BiK). Meaning that the Government had been giving a tax break with one hand and taking it away with the other.
Prior to April 6th, 2020, the BiK rate on pure electric vehicles was 16 percent. Therefore, the way that the maths worked out meant that much of the tax benefit of the salary sacrifice was eaten up by the 16% charge.
However, the changes put in place from April 6th, meant that electric vehicle company car tax dropped to a zero BiK rate and salary sacrifice benefits can now be felt in full.
Watch our short video below for a further explanation.
How to save more money with an EV!
General savings
The future of motoring is electric and an EV can offer you many advantages:
- No London Congestion Charge or ULEZ Charge
- No electric vehicle company car tax ( Benefit-in-Kind Tax)
- Help the environment and stop climate change
- Exempt from paying any vehicle tax!
- Free parking for electric vehicles where applicable
‘Filling up’
Just like traditional fuel engine vehicles, the cost of buying and running an electric vehicle varies depending on the model, make and specifics of the vehicle. There’s good news for you, electric vehicles are likely to cost you significantly less over the course of time. The cost of electricity is much lower than petrol or diesel.
With the average UK electricity price sitting at around 14p per kWh. If you assume an electric car will travel 3.5 miles per kWh on average, to travel 100 miles would cost around £4 in total or 4p per mile. If you have a cheaper fixed tariff, then it’s likely the cost to ‘fill up’ your EV will be even cheaper.
However, a petrol car would cost around £11 to do 100 miles (11p per mile). That is assuming that fuel costs around £1.25 per litre and the UK’s average new car fuel consumption in 2017 was 51.7 miles-per-gallon.
Think about it though, if you would usually spend £100 to £130 a month on petrol or diesel and opt to switch to electric you will be saving a significant amount.
Not to forget that with any hire of an EV from EVision of 12 months+ we will install a FREE home charger! Yes, FREE! As well as with any hire of a Tesla Model S, X or 3 you can benefit from free Tesla Supercharging*. Meaning that you charge your Tesla EV up and not pay a penny!
Maintenance costs
It may come as a surprise that EV maintenance is far simpler than a regular Internal Combustion Engine (ICE) vehicle. With fewer moving parts, there’s far less to worry about. This makes electric car servicing and maintenance much easier and more cost effective.
It’s simple really. Think of all the parts that make up a regular car. The engine, radiator, pistons, spark plugs, fuel pumps, cooling systems, exhaust system and timing belt to name but a few. In fact, a regular car can contain hundreds of working parts. Meaning that there’s lots that can go wrong and more parts that need replacing over time. In comparison an electric vehicle has a lot less to wear out. Therefore, maintenance costs can be as much as 70% less in this area.
Research by automotive data experts cap hpi revealed that service and maintenance costs for an electric car are on average 23% cheaper. This of course, depends on the model that you drive and how you drive it.
One thing that is still comparable between ICE vehicles and EVs, is tyre wear. Tyres will still need to be changed regularly.
Don’t forget that with any hire from EVision you don’t need to worry about any maintenance or tyre costs! It is covered by our EV care which includes;
- Roadside recovery
- Replacement vehicle
- 24 hour helpline
- FREE tyre replacement*
- Full maintenance and service costs included
This is a huge bonus for any driver and provides an even bigger benefit for high mileage fleet vehicle owners. Along with all this, fleet customers enjoy a further discount on multi-car hires.
Want more information or have questions?
Now that you know more about the huge tax savings that you can make due to the zero percent electric vehicle company car tax, are you interested in an EV for yourself or your employees? If you’re looking to get a quotation or breakdown of calculations then contact our friendly experts today on 01634 914063. Even if you simply have more questions, our team will be delighted to help and answer them for you.
*Subject to EVision Fair Usage Policy
