9 reasons why driving electric will put money back in your pocket!
From 100% capital allowance, zero benefit in kind tax, no congestion charge fees & lower fuel costs, we present 9 reasons why the financial benefits of electric cars and vans outweigh their heavy price tags — we also present 4 car & van examples that show you how!
We first wrote about the tax and cost benefits for UK drivers in June 2019, and described it as the biggest missed opportunity of our time. Back then only 2.7% of UK new vehicles were electric, and given the increase to 6.5% of pure electrics in 2020 what are the tax and cost benefits that remain?
Like we did last time, before we list the individual benefits, here’s what we found when we carried out a comparison of some electric cars and vans, versus their diesel/petrol versions. The collective differences in tax/levy amounts, fuel journey costs and emissions were very interesting!
So now that we’ve got your attention, lets look at what exactly the 9 main benefits are:
1. 100% first year tax allowances for businesses
Zero emission cars qualify for a 100% First Year Allowance (FYA) on the purchase cost.
2. Lower NICs & 0% Benefit In Kind tax
For employee company cars, lower Class 1A NICs — based on the vehicle’s P11D value and the lower BIK rates for zero emission pure electric vehicles (see point 5 below).
3. Congestion Charge & ULEZ exempt
Pure electric vehicles are 100% exempt from the current £15.00/day London Congestion charge & the £12.50/day Ultra Low Emission Zone charge. Both zone areas and fee amounts are set to increase over the coming years.
4. Eligible for Salary Sacrifice
Pure electric vehicles are eligible for Salary Sacrifice, ensuring a lower National Insurance bill for both the employer and employee.
5. Reduced Benefit In Kind Tax
Zero emission vehicles offer the lowest BIK rate — 0% for 2020/2021, 1% for 2021/2022 and 2% each tax year until 2025; versus 20–37% for the average petrol or diesel car.
6. Zero Car Fuel Benefit Charge
Employees are exempt from paying Benefit In Kind tax on car charging electricity at work.
7. Plug in Car and Van Grants
Up to £2,500 and £6,000 grants available for purchase of new 100% electric cars and vans, respectively. Following the recent reduction of the former from £3,000 by the government, some car manufacturers like Citroen have followed this up with reductions in the vehicle prices.
8. Zero VED Road Tax
With zero emissions, all pure electric cars are exempt from Vehicle Excise Duty.
9. Lower Fuel and Maintenance Costs
Electric car journeys cost on average 3–5p per mile, vs a UK average of 9p per mile on petrol/diesel, representing over +55% in fuel cost savings.
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ChargeBound is a company dedicated to encouraging UK drivers to go electric. Our mission is to eliminate car passenger emissions in the UK and get us closer to being carbon neutral. To find out more about what we do, check out ChargeBound’s website.
Photo by Nathan De Fortunato on Unsplash
