Zero and ultra low Emission vehicles
How you could save your business money
In recent years, the number of alternatives to traditional fuel vehicles has increased rapidly. More and more businesses are powered by 100% battery-electric vehicles (BEVs), plug-in hybrids (PHEV), traditional hybrids and, in some cases, hydrogen fuel cell cars.
With government incentives and grant schemes, switching to low emission fuels could offer your business significant savings and make your fleet more efficient.
Government Plug-In Grant
A Plug-In Grant of up to £2,500 per car is available for government-approved cars that cost £35,000 or less with zero CO2 tailpipe emissions when driving.
Other grants are also available for motorcycles, mopeds, vans, taxis, large vans, and trucks.
Electric Vehicle Homecharge Scheme
The EVHS provides grant funding of up to £350 Incl. VAT or 75% (whichever is lower) towards the installation of an EV chargepoint unit at a domestic property in the UK.
This grant covers one OZEV-approved unit per eligible electric or plug-in vehicle, and up to two eligible vehicles per household. The unit must be installed by an OLEV-approved installer, and you must be the vehicle's named primary user.
Benefit-In-Kind Tax
The BIK tax system incentivises business drivers to choose low emission vehicles. The exact benefits vary depending on the car's CO2 emissions and it's all-electric zero emission range.
For cars with zero CO2 tailpipe emissions when driving – as well as new cars with CO2 tailpipe emissions of 1-50g/km and a minimum all-electric range of 130 miles – the BIK tax rate is set at 1% in 2021/22, rising to 2% in 2022/23, at which level the rates remain frozen until 2024/25.
Other considerations
Fuel duty
As fuel duty is paid per litre of road fuel, fuel efficient vehicles will lead to savings. As electricity isn't subject to fuel duty, BEVs are duty exempt.
Fuel benefit charge
There's no fuel benefit charge for BEVs, so your drivers can top up their vehicle's battery without constituting a taxable fuel benefit.
Enhanced capital allowances
A new-registration, zero-CO2-emission car qualifies for a 100% first-year capital allowance (in 2021/22). Cars with CO2 emissions of 1-50g/km qualify for an 18% allowance, while cars with 50g/km+ qualify for a 6% allowance.
Capital allowance "super deduction"
A 130% first-year tax allowance applies to expenditure on items including vans and EV charging equipment. This means that your company could cut its tax bill by 25p for every £1 invested.
Vehicle Excise Duty
Low- and zero-emission vehicles attract favourable rates of VED, including an exemption in 2021/22 for cars with zero CO2 emissions.
VAT
Electricity used to charge a pure BEV at home attracts only a 5% VAT rate, compared to the 20% VAT rate applied to petrol, diesel, hydrogen, and workplace electric recharging.
