We don’t seem to have flying cars yet and even self-driving models are a little way off from becoming mainstream, but electric vehicles (EVs) are seeing a huge increase in popularity for both domestic and commercial use. In this guide, Aaron Gilmore, owner of TreyBridge Accountants, shares some advice on the benefits of EVs for business owners.
Why switch to an electric car?
Choosing an electric vehicle is an excellent decision, as it brings with it multiple benefits:
- Better for the environment. Depending on where the car’s parts were manufactured, a fully electric car will emit between 28% and 81% less CO2 than a traditional car that runs on petrol.
- Increased safety. Recent tests have shown that due to electric cars having a lower centre of gravity, they’re less likely to roll over. They can also come with a lower risk of major fires and explosions occurring in the event of a collision thanks to a stronger framework.
- Improved health. Electric cars have significantly reduced exhaust emissions, resulting in better air quality for everyone.
- Lower noise pollution. EVs are quieter than petrol and diesel cars, meaning less noise pollution.
- Increasing range. Most current electric vehicles can travel around 300 miles before requiring a charge, with future models likely to improve on this even further.
The list above is usually enough to sway a vehicle buyer to choose electric right away. However, if you need further convincing, you’ll be pleased to hear that there are financial benefits that come with using an electric car for business purposes.
“Put simply, electric cars are cheaper to run,” says Aaron. “On average, an EV will travel 100 miles at a cost of around £4 in electricity usage. Traditional cars will usually cost twice this much to run, plus electric vehicles are becoming more economical with each year that passes.”
More affordable maintenance
Due to electric cars having fewer moving components, their general maintenance is much simpler. They don’t have parts such as starter motors, complex exhaust systems, radiators and injection systems, which can often cost a lot to repair and service. It’s true that there’s a different cost involved, in that the battery only lasts for about eight years, but chances are the savings you make in this time will more than cover a replacement.
Reduced tax liabilities
Aaron says: “Business owners choosing electric cars will enjoy zero tax through Benefit in Kind if the vehicle is owned by the business. There’s also the bonus of 100% of capital allowances in the first year, so if you purchase an electric car for business purposes, you can deduct the full cost from your pre-tax profits.
“As for road tax, you don’t have to pay this at all due to it being based on CO2 emissions. Hybrid vehicles come with some road tax due to them still using some petrol or diesel, but your bill will be substantially lower compared to when driving a traditional vehicle.
“The only exception is if the vehicle was purchased for £40,000 or more, as all cars in this price bracket come with an additional road tax bill. However, rather than the normal £475 it will only be £325 a year for the first five years. Crucially, some of the best electric cars on the market cost a fair chunk less than £40k, so this needn’t necessarily be a concern.”
No more congestion charge
If you live in or travel around areas that have a congestion charge, electric vehicle drivers don’t have to pay it. Some local authorities don’t currently have a congestion charge but may launch one in the future, so it’s definitely worth considering how an EV could save you even more money as localised laws change.
A good example is London, as its Congestion Charge Zone is charged at £15 a day. Not having to pay this means saving an additional £5,475 a year.
Lower tax on fuel
Business owners still have to pay 20% tax on the electricity that’s used to charge their vehicles. The upside is that there’s no fuel duty tax, which is currently 58p a litre and really adds up if you drive regularly for business purposes.
Electric vehicle advice
Aaron Gilmore is the owner of TreyBridge Accountants, which delivers bookkeeping, payroll, credit control and tax advisory services to businesses across the UK. Get in touch with him to find out more about how choosing EVs can seriously improve your monthly cash flow.