Benefits of Electric Cars & Vehicles: Road Tax and Government Grants

The fuel crisis last September has encouraged many people to look into the benefits of electric cars. And with good reason! Below, we share some of the main benefits of using electric vehicles for your business.

At Newnham & Son, we do our utmost to help our business clients make the best decisions possible when it comes to their taxes. Thanks to our extensive knowledge and background in tax and accounting, we can help you legally pay less tax on a yearly basis. To find out more, contact us today.

The Benefits of Electric Cars for Your Company

Drivers of company-owned electric vehicles will find it particularly rewarding. This is because the taxable benefit for using an electric company car is currently just 1% of its list price. Moreover, there is zero taxable benefit for using an electric company van.

The taxable benefit for electric cars is due to double from 1% to 2% of the list price on 6 April 2022. But, then it will be frozen at that level until at least 6 April 2025.

If the company pays for the electricity to power the vehicle, there is no taxable benefit for the use of that electricity. The company can pay either through a charging point at work or by providing a payment card for the employee to use at public charging points.

But, the benefits of electric cars don’t stop there!

If the employee charges a company vehicle at home they can claim 5p per mile for business journeys. These include all business journeys driven from 1 December 2021 (previously 4p per mile).

If your electric car is in your own name you can still claim the standard 45p per mile for business journeys. This equates to up to 10,000 miles per year. You will also have zero road tax (VED) to pay.

Where your company has the cash available to buy an electric car, it can get a 100% deduction for the cost in the year of purchase. On the other hand, electric vans currently qualify for a 130% deduction.

There are also government grants of £2,500 available for the cheaper electric cars and for installing charging points.

Want More Tax Tips?

With over 30 years of combined experience, we pride ourselves on running an open, ethical practice. Our goal is to support our clients where they need it most. If you would like more tips to reduce your personal and business taxes each year, contact us today and our team will be happy to help.