Use an Electric Car

  • July 16, 2018
  • March 29, 2023
  • Shaz Nawaz
  • 4 min read

We all hear a lot these days about being environmentally-friendly and one of the ways in which you can help is by running an electric car – even if you just use this as a ‘second car’.

Before you dismiss the idea, just bear in mind that these are getting better all the time. True, it usually takes several hours to charge up the vehicle using your domestic power supply, but as long as you’ve got electricity laid on to your garage, just get in the habit of plugging in every time you put the car away. When you’re travelling you’ll be able to go further than you might think – apart from charge points available in parking areas and at dealer showrooms (where the charge up is much quicker), many hotels, supermarkets, etc will also provide this as a customer service.

Cost? Well of course you’re paying for the electricity but then you’re not paying for petrol or diesel. A big expense however is the cost of the batteries. You can buy these – but they do have a limited life and you will then need to replace them. The alternative is leasing. Your dealer will be able to provide you with details of the comparative costs.

Still not convinced? Using ultra low emission vehicles (ULEVs) – vehicles that emit less than 75g of carbon dioxide (CO2) for every kilometre travelled (typically electrically-powered cars and hybrid vehicles) – can be a very advantageous taxation/business expense strategy. Here’s some of the advantages:

  • No fuel duty as electricity is not a fuel in this context
  • Reduced vehicle excise duty (zero emission vehicles valued less than £40,000 are now exempt)
  • Electricity used to recharge vehicles at home is taxed at 5% VAT only
  • If you provide a car for any employee (including directors) there’s no car fuel benefit charge (as electricity is not a fuel)
  • Income tax advantage for salary sacrifice in exchange for a ULEV as a benefit in kind
    Lower taxation for company cars where the vehicle is a ULEV
  • Advisory Fuel Rates (the amount an employee may be paid for business mileage without it being classed as a benefit on kind) – if you have a hybrid you can use the equivalent rates for petrol or diesel
  • Enhanced capital allowances – businesses that purchase cars which emit less than 75g CO2/km, zero emission goods vehicles, or ULEV recharging or refuelling infrastructure, are eligible for 100% first year allowance.

Do you run a ULEV – or are you thinking about getting one? Do share your views with me.

AA Accountants

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