Is it time to make the switch to electric?
The UK government’s push towards decarbonising the roads means that drivers are being encouraged more than ever to invest in zero-emission vehicles.
Along with doing your bit to reduce air pollution, you can also benefit from a number of electric car incentives and grants to make the transition that bit easier.
We’ve rounded up a list of benefits that you may be eligible for to cut the cost of owning an electric car.
Electric car grants for your home
EV chargepoint grant
To help make at-home charge point installation more affordable for electric car drivers, the UK government introduced the EV chargepoint grant. It covers a portion of the cost to install a chargepoint socket at a residential property. You’d get either £350 or 75% off the cost to buy and install a socket, whichever amount is lower.
It’s provided by the Office for Zero Emission Vehicles (OZEV) and is available for anyone who:
- owns and lives in a flat
- rents a residential property
- has private off-street parking
- owns an OZEV-approved electric vehicle
EV owners cannot apply if:
- they live in a house that they own
- they are a lodger in someone else’s home
- they’re moving house or intending to move
- they’ve already claimed the grant (or one of its predecessors)
- they want to replace a charge point
- they want to move an existing charge point to a new property
- there must by law be a charge point
To apply for the EV chargepoint grant, drivers must get in touch with an OZEV-approved installer to receive their quote for installation and their quoted chargepoint model must be on the OZEV-approved model list. If all the criteria are met, the chargepoint installer will start the claim to begin the process. OZEV will pay the grant to your installer and the EV owner will pay the rest.
For the latest EV chargepoint grant information, visit the gov.uk website.
Electric car grants for your company car
Reduced Benefit in Kind
If your employer gives you a company car to drive for private use or for commuting, you'll have to pay a tax on it and it will need to be reported to HM Revenue and Customs (HMRC). This is known as Benefit in Kind (BiK) tax.
BiK is how HMRC can collect tax from the benefit of an employee having a company car. Both companies and employees must pay BiK, but the actual price of the tax is calculated differently for each party.
Since carbon emission output is key to how much companies and employees pay for BiK, company car drivers are being encouraged to switch to EVs as they are more tax efficient and can benefit from paying less Benefit in Kind.
Hybrid vehicles will also benefit from a reduced BiK tax rate as they will emit fewer emissions than combustion-engine cars.
For the latest BiK tax rates for electric vehicles, visit the gov.uk website.
Salary sacrifice
Salary sacrifice is a scheme that gives employees benefits, with very little or no cost at all to a business. Examples of popular salary sacrifice schemes are pension contributions and cycle-to-work schemes.
The EV salary sacrifice scheme enables employees to make monthly payments toward an electric car by using their pre-tax salary. It ultimately means that employees can purchase a new car at a lower cost, since the EV car monthly payment is taken first, meaning tax and National Insurance Contributions (NIC) are based on a lower salary amount. This means that employees will pay less tax and NIC each month.
It also means that an employee can lease a car without having to pay an initial upfront cost and there are no obligations once the leasing term has finished.
Employers can also benefit from the EV salary sacrifice scheme, as they will be able to save on monthly NIC payments as well.
Those eligible for the salary sacrifice scheme must be on a permanent contract and it will also depend on their company’s policy.
The latest information can be found on the Government’s website.
Electric car grants for your business
Workplace Charging Scheme
Companies that provide charging facilities and electricity for their employees to recharge electric vehicles can benefit from the Workplace Charging Scheme (WCS). It’s an incentive for employers to make their workplaces more electric-vehicle friendly for employees.
It’s a scheme that supports businesses with the initial costs involved with purchasing and installing EV chargepoint sockets at their sites. Companies are eligible for up to 40 charging sockets across all their business sites. This means that if they wish to install chargepoints in 40 sites, they will be able to have one socket per site.
Any company looking to participate in the scheme must apply via an online application form. If it gets accepted, they will receive a voucher code which will need to be given to an OVEZ-approved commercial charge point installer. The installation needs to be carried out and the voucher used within 180 days of its issue date.
The installer can then claim the money from OVEZ for the grant, who will reimburse them for the value of the voucher, and it will be deducted from the overall cost of installation.
Capital allowances
Companies can claim capital allowances on items kept and used in their business. These items include equipment, machinery, and business vehicles.
It works by employers deducting part, or all, of the value of the item from their profits before they pay tax. To work out the value of an item, it’s usually the amount that a business purchased it for. Companies can claim capital allowances on cars bought and used for business purposes.
The exact rate that your business may be able to claim back will be based on when the car was bought and its CO2 emissions.
The latest information can be found on the gov.uk website.
Reclaiming VAT
Employers can reclaim VAT for business expenses, and they may be able to reclaim all the VAT on a new car — but they must be able to prove that the vehicle is driven solely for business use. Companies who want to reclaim VAT on a company vehicle have to show that it isn’t used for personal reasons, for example, by including it within their employees’ contracts.
It’s also worth noting that commuting from home and work counts as personal use.
Companies purchasing a second-hand car for business use must have a sales invoice that clearly displays the VAT.
The gov.uk site has more detail on reclaiming VAT on company cars.
Discover electric car tax benefits and grants to help you go green
Whether you’re looking to buy an EV for personal or business use, there are plenty of schemes that can help you to keep costs down.
To keep your electric car covered against the unexpected, it’s crucial that you have the right Electric Car Insurance to make sure that you’re financially protected.
Learn more about our Electric Car Insurance today.