David Simpson 23rd Feb 2018 3 Min Read
Tightening regulation, technological innovation, and financial incentives are all speeding us towards an electric future on the road.
With improved energy efficiency, improved air quality and reduced noise, electric and hybrid vehicles clearly mark the way to the future of mobility. The UK is cruising its way towards a ban, in 2040, on the sales of new petrol and diesel cars. The wheels of fortune are turning for the early-adopters of the electric charge. Both individuals and companies can benefit from a £600 million government commitment to improve the uptake and transition to electric vehicles. Fuel-efficient and clean energy vehicles fit perfectly into a political dilemma on how to tackle the climate change challenge. Government targets and shifting consumer preferences aside are a key driver in making the crucial switch are the financial incentives on offer. While the big auto manufacturers are making strides in the development and production of electric and hybrid cars. The government funds are already at work providing tax reliefs, subsidies and building a network of electric charge points across the country.
There are considerable savings to be had on the purchase of new cars and charging infrastructure. First off, a business owner will gain major savings on the purchase of vehicles. Capital allowances enable companies to set off the cost of purchasing electric cars and vans against taxable profits. In this way, the cost of the car is not subject to corporation tax. This tax relief currently applies to the full cost of electric vehicles with CO2 emissions of or below 75g per km. From 31st March 2018 until April 2021, the new limit of 50g per km. For those cars with a higher percentage of CO2 emissions, there are still options that allow percentages of their value to be subtracted from profits. All this offers huge potential savings for companies with low g/km fleets. Electric charge points are part of this picture too. Government grants and tax exemptions are available to companies installing electric charge points for employee usage. Large companies with over £200,000 annual spend on plant and machine investments can deduct installation from taxable profits. Smaller companies can take advantage of a £300 grant on each charge point installed, up to 20 charge points. Changes to employee salary sacrifice schemes are also giving jump-starts to the uptake of electric. Whereas the tax advantages of being offered a company car in place of cash have recently been outlawed by new government rulings. Low emission cars still qualify and that allows for the popular employee benefit to continue.
The most significant benefits of taking the electric car route are the impact it can have on a brand. A company’s fleet is part of the expression of its values and environmentally-conscious. Cars speak volumes about wider company attitudes and ethics. Companies today are marketing to an increasingly savvy audience that is growing its social and environmental awareness. It is a consumer increasingly likely to favour brands that prioritise environmental stewardship. The individual consumer should be concerned about the upfront costs of going electric. They should be aware of schemes in place to smooth the journey towards a greener choice of car. Currently, buyers can claim up to £4,500 towards the price of a qualifying vehicle through the government’s ‘plug-in’ grant. A further £500 towards the price of a qualifying charge point through the Office for Low Emission Vehicles, OLEV grant. A cost-aware commuter will find savings whilst travelling to and from work too. Qualifying low emission vehicles are currently exempt from the London congestion charge. They will also be exempt from the tax levied on drivers in the forthcoming ultra-low emissions zone, launching in London in 2020. Added to that, with much lower fuel costs than the petrol or diesel equivalent, the electric version of the car is significantly cheaper to run. Electric cars are synonymous with the future. The frontrunners are keeping their eyes closely on the road ahead.
A hands-on design engineer, David is responsible for driving the latest design, engineering and software developments. His experience ranges from hi-fi product design to the programme management of complex financial service software. When he’s not talking about firmware updates, tooling or road maps you’ll see him running in Hampstead Heath or ferrying his kids to school on his electric bicycle.