New research has revealed that at least a quarter of fleet decision makers aren’t aware of the money-saving incentives available for adopting EVs.
The survey by vehicle leasing experts, LeasePlan UK, found that 24% of decision makers – including fleet managers – in businesses of all sizes weren’t familiar with lower Company Car Tax or Vehicle Excise Duty (VED) rates for EVs.
Similarly, over a third (35%) aren’t familiar with first year allowances for zero-emission vehicles, while more than two fifths (43%) weren’t aware of the extension to the plug-in car grant. And, with range anxiety one of the most common barriers to EV adoption, a third (33%) were also unfamiliar with investment into the national charging infrastructure.
With that in mind, Chris Black, Commercial Director at LeasePlan UK, has pulled together everything you need to know about those EV incentives for the 2021-22 financial year, and the reasons why they’re so important.
Company Car Tax
Our survey showed that lower Company Car Tax rates for EVs have made a difference to vehicle policies for over half (52%) of respondents. With huge savings to be made in comparison to traditionally fuelled vehicle, businesses with zero-emission vehicles paid a Benefit-in-Kind tax rate of 0% in 2020/21, and from April this year that rate is increasing to just 1%.
Low Benefit-in-Kind rates result in significant savings for employers, but another way that businesses and employees alike can make savings is via a Salary Sacrifice scheme. But despite that, one fifth (20%) of HR bosses weren’t aware of the scheme, despite 44% and 39% of companies respectively offering either employee car ownership or salary sacrifice for a car.
Simply, salary sacrifice schemes offer enable employees to pay for certain benefits, such as childcare vouchers and pension plans, using their pre-tax income, yielding big savings. This includes company cars, too.
Employees who get an Ultra-Low Emissions Vehicle (ULEV) through salary sacrifice only have to pay Company Car Tax on the taxable value of the car, rather than Income Tax on the higher of the car’s value or the salary sacrificed. What’s more, with most salary sacrifice for car schemes, a single monthly payment covers everything except the fuel. Running costs, maintenance or breakdown and repair charges are all included.
Vehicle Excise Duty
Vehicle Excise Duty (VED) is a Government vehicle tax applied to every vehicle on our roads in the UK, and was found in our research to make a difference for two fifths (41%) of decision makers. First year rates of VED vary according to the vehicle’s CO2 emissions, and after that a flat standard rate applies in subsequent years, except for zero-emission cars for which the standard rate will be £0.
First year allowances
Capital allowances apply to qualifying assets (such as water and energy saving equipment) and allow businesses to deduct the full cost from their profits before tax, and this includes some low emission vehicles. The rate you can claim depends on when it was purchased and exactly how much CO2 it emits, with electric vehicles eligible purchased after April 2009 eligible for first-year allowances, offering further savings for businesses.
In our survey, first year allowances for zero-emission vehicles made a difference to 46% of decision makers.
In 2020, our research found that the extension of the plug-in car grant made a difference for half (49%) of decision makers. But, since then, the UK Government have announced an unexpected and immediate decision to reduce plug-in grants, lowering the discount available on new EVs.
That said, the Plug-in Car Grant still offers purchasers a reduction of up to £2,500 on models costing up to £35,000, while the Plug-in Van Grant offers a maximum reduction of £3,000 for small vans and £6,000 for large vans. Similarly, the Plug-in Truck Grant (PiTG), offers up to £16,000 off trucks up to 12.5t GVW, and up to £25,000 for trucks over 12.5t.
Electric Vehicle Homecharge Scheme
One huge barrier to EV adoption is the availability of charging infrastructure, or in fact the lack of it. That’s why 45% of decision makers said that investment in the national charging infrastructure would make a difference in encouraging them to transition to electric. To help with that, the Government’s Electric Vehicle Homecharge Schemeoffers a 75% contribution to the cost of one chargepoint and its installation, up to a total cost of £350, for EV owners.
The value of EV incentives
Last year was a truly pivotal point for the motoring industry. For the first time ever, sales of EVs overtook sales of diesel engines. At LeasePlan, too, we had our greenest year yet.
So, the government’s recent decision to announce and reduce plug-in grants on the same day really took this industry by surprise. The instantaneous change made sense – preventing a spike in claims – but left uncertainty in its wake. At a time where many motorists are only just waking up to the numerous benefits of EVs, the government risks undermining its own messages around decarbonisation and promoting a green recovery by taking away vital incentives.
For this industry to thrive on this journey to electrification, we need to keep up that momentum up. Now is not the time to slam our foot on the brakes – let’s keep pushing forward to improve infrastructure, and continue to provide incentives to enhance EV ownership. After all, EVs are part of a brighter, greener future for us all.