CBVC’s success in fleet management is exemplified by its recently renewed partnership for a further 3 years with Europcar Mobility Group UK, where their expertise led to a significant reduction in CO2 emissions from an average of 129 g/km to just 29 g/km per company car over the initial three years. This achievement underscores CBVC’s capability in supporting large-scale fleet electrification, with nearly 80% of Europcar’s drivers now using battery electric vehicles. This partnership has played a crucial role in enhancing fleet efficiency and supporting Europcar’s ‘One Sustainable Fleet’ decarbonization strategy.
Mike Manners, Managing Director of CBVC Vehicle Management, explains, “Our partnership with ElectriX allows us to extend our proven fleet management solutions to a broader range of businesses looking to electrify their fleets. We’re combining our expertise with ElectriX’s platform to offer a comprehensive, end-to-end service for electric vehicle adoption.”
CBVC supports ElectriX’s Fleet and Salary Sacrifice accounts with a suite of sophisticated tools and services:
Advanced Vehicle Selection System: Instead of traditional car lists, CBVC provides clients with access to a state-of-the-art Vehicle Selection Site. This interactive platform offers detailed information about available electric vehicles, including video reviews and vehicle trade-up options, helping drivers make informed decisions based on their specific needs and preferences.
Driver App: A user-friendly mobile application that keeps drivers connected and informed about their vehicles, charging options, and maintenance schedules.
Duty of Care Compliance Tools: Ensuring that businesses meet their legal obligations and maintain the highest standards of safety for their fleet drivers.
Carbon Reduction Tools and Strategy: Comprehensive solutions to help businesses track, manage, and reduce their carbon footprint as they transition to electric vehicles.
Mark Newberry, Commercial Director and Sustainability spokesperson at Europcar Mobility Group UK, attests to the effectiveness of CBVC’s approach: “We are working with a wide diversity of businesses that are getting to grips with reducing emissions on their own fleets. It is, therefore, essential that we can show we understand the barriers they may face when aiming to win the hearts and minds of their drivers. By working with CBVC we have been able to deliver a streamlined solution that makes it easy for employees to make the switch.
“We have also learnt about some of the things that drivers worry about before they make the switch – and the reality once they get behind the wheel of their electric company car.”
The success of the Europcar partnership demonstrates CBVC’s ability to manage large fleets efficiently and their commitment to exceptional service – key factors in client satisfaction and partnership renewals, setting them apart from competitors in the market.
Julie Hayes, Account Manager at CBVC, highlights the company’s innovative approach: “Our innovative automated selection process rewards drivers for picking lower C02 cars. And with recent increases in prices, we have demonstrated the value of a multi-bid approach to funding.”
As businesses increasingly look to electrify their fleets, CBVC’s partnership with ElectriX offers a compelling solution. ElectriX aims to demystify EV adoption by providing clear information on costs, charging, and ownership, as well as information on leasing and everyday electric car driving information and tips. By combining ElectriX’s platform for showcasing available electric vehicles and leasing options with CBVC’s comprehensive fleet management services, the partnership provides a one-stop shop for businesses looking to transition to sustainable mobility.
Are you ready to go electric?
Want to know if an electric car is the right choice for you?
Join in with our simple online quiz to find out more.
Simon Stacey brings a wealth of over 20 year’s experience from across the energy and technology sectors to his writing on electric vehicles (EVs). Currently, he is Head of Product at ElectriX where he leverages his expertise in digital and net-zero transformation to ensure the business stays at the forefront of innovation.
Tax benefits of electric car business contract hire
In this article we highlight the tax benefits of electric car (or van) business contract hire (BCH), an agreement between a company and a car leasing firm to lease any number of vehicles, and for electric cars or vans offers a number of tax benefits, due to low benefit-in-kind rates and refundable VAT on the lease.
There are many advantages to electric car business contract hire. For example, costs are predictable and fixed each month. At the start of the contract a term, annual mileage and initial rental are set, and the car is chosen. Maintenance can be included also, while some companies will also offer insurance and smart charger installation as part of the package.
The savings with electric vehicles are considerable, the running costs or “fuel” cost being the main one. Charging at home using an EV-friendly, off-peak tariff can be as cheap as 5p per mile (as at February 2024). Which means a 50-mile trip can be done for just £2.50. And with diesel prices at about £1.50 per litre (as at February 2024) the same trip at 50mpg could cost about £6.83.
Tax benefits of electric car business contract hire
One of the biggest benefits of BCH for electric cars and vans are the considerable tax benefits of EV business contract hire.
The monthly rental fee can be offset against the company’s taxable profit. And with an electric vehicle, there’s no taxation penalty for carbon emissions.
If the car (or commercial vehicle) is used purely for business, 100% of the VAT on the monthly lease is refundable. It’s 50% if it is used for both business and the personal use of the employee. Cars normally get the 50% rebate, and vans or lorries the full sum.
The VAT can also be reclaimed on the maintenance element of a BCH agreement if that’s part of the package. However, your business must be VAT registered.
Additional fees, such as end-of-contract wear and tear charges or those for excess mileage can be offset against tax.
You won’t have to pay company car tax if you’re a sole trader or have a Limited Liability Partnership (LLP).
Running costs will be lower when travelling into Clean Air Zones (CAZs) as electric vehicles are exempt from charges.
Whether you’re upgrading your fleet or starting a new business and wondering how to provide your employees with vehicles. All in all Business Contract Hire for electric vehicles is worth considering.
The ultimate guide to a business electric car lease
What is a business electric car lease? Why lease a business electric car rather than purchase one? Is there a difference between a business lease and a personal lease? Why choose an electric car lease instead of hybrid, petrol, or diesel cars? Let us answer all your questions in our Ultimate Guide to Leasing an Electric Car for Business.
A business electric car lease refers to an agreement between a business and a leasing provider. It allows the business to lease one or more electric vehicles for a certain amount of time, typically ranging from 2 to 4 years. If you are leasing an electric vehicle through your business, your company pays a monthly fee for the use of the car. The expense counts against your profit and loss account and is fully allowed against corporation tax.
To be eligible you need to be a credit worthy sole traders or partnership, limited company or VAT-registered company.
How does business electric car leasing work?
Business Contract Hire (BCH) is the quickest and easiest way for small businesses to switch to electric vehicles. If you pay yourself in dividends rather than a salary or run a small fleet of company cars, BCH is a great way to get a company EV and take advantage of low company car Benefit in Kind tax rates.
BCH works like a long-term rental agreement. You and your company choose an electric company car, and decide on an acceptable monthly fixed repayment fee, mileage allowance limit and whether you need maintenance support. The contract is signed for a set period of time – typically between 2 and 4 years. At no point does the company own the car, at the end of the contract, the car is simply handed back.
Why businesses should consider electric car leasing rather than buying?
Lower Corporation Tax – lease any car with CO2 emissions of 50g/km or less and the full monthly rental payments are classed as deductible expenses. Meaning these costs can be off-set against company profits, leading to lower Corporation Tax.
VAT savings – leasing companies can reclaim VAT on every vehicle they lease, passing the savings on to customers.
Attractive balance sheet – lease a company car and the asset or liability will not be shown on the balance sheet.
Residual value protection – by leasing instead of buying, companies are protected from the financial risk of the vehicle losing value.
Financial certainty – leasing enables companies to plan budgets based on fixed monthly costs, with greater protection from unexpected maintenance costs.
Protected cash flow – leasing allows companies to keep capital in their business to enable growth.
Benefit in Kind – EV’s qualify for significantly lower BiK rates compared to higher emission diesels and petrol equivalents.
Enjoy the latest EV technology – With the current evolving EV market, new technologies are developing constantly. Leasing allows you to experience the latest electric cars and EV technology with new battery life, range or style every few years.
Why choose electric business leasing over personal leasing?
Most leasing companies offer a choice of both Business and Personal Leasing. Or as it’s more commonly called, Business Contract Hire (BCH) or Personal Contract hire (PCH). For BCH, you’re leasing the car or fleet on behalf of your company, while PCH is just for you. The annual mileage allowance is often higher on a business lease to account for regular motorway journeys.
Business electric car lease VAT
If you’ve ever compared the BCH and PCH price, you’ll know that there’s quite a difference. It all comes down to VAT. Business prices are often shown with the VAT already discounted, while the personal contract always includes VAT, which in August 2023 was 20%.
If your company is VAT registered, you can claim back 50% of the VAT on the monthly payments – plus 100% of VAT back on the maintenance agreement.
Can I use a leased business car for personal use?
Employees are free to use a company car for personal use, so long as they are not claiming that the car is solely for business use only. Employees who use a company car for personal use have to pay company car tax otherwise known as Benefit in Kind. BiK rates are for EV drivers are currently substantially lower than those for traditional fuels.
Why lease electric vs hybrid, petrol or diesel?
One of the most notable benefits of electric cars is the help they provide in reducing greenhouse gas emissions over their lifetime compared to fossil fuel powered vehicles, even when accounting for manufacturing.
However, switching to a business electric car, especially leasing a car, has various benefits that you might not be aware of.
Lower BiK rates for business electric car lease
Benefit in Kind (BiK) is a tax on employees who receive benefits or perks on top of their salary. If employees have the use of a company car for private use, they have to pay a BiK contribution, also known as company car tax.
Every car has a BiK rating based on CO2 emissions, and a P11D value – which is the list price, including extras and VAT, but doesn’t include the first-year registration fee and vehicle tax.
The current company car tax rate for electric cars is just 2% fixed until April 2025, compared to up to 37% for some diesel cars. The rate is set to increase, but by just 1% each year until it reaches 5% in April 2028 – still way below the rate of petrol and diesel cars.
Here are a couple of examples of the BiK rate differences between Petrol and Electric cars. As you can see EV business leasing could save you thousands.
Electric car example:
Petrol car example:
List Price
£40,000
£40,000
BiK Rate
2%
31%
40% tax payer pays
£320 annually
£4,960 annually
20% rate tax pays
£160 annually
£2,480 annually
Lower Class 1A National Insurance contributions
There are two kinds of company car tax on electric company cars. As we’ve discussed, employees pay Benefit in Kind tax, while employers pay Class 1A National Insurance Contributions.
Switch your company cars to electric and you can save on NI contributions. That’s because companies pay National Insurance on an employee’s Benefit in Kind. Quite simply, the lower the employee’s BiK payments, the lower the company’s NI contribution.
Zero Vehicle Excise Duty for a business electric car lease
Until April 2025, owners of electric cars are exempt from Vehicle Excise Duty, commonly referred to as road tax. Drivers of petrol and diesel cars must pay an annual fee based on their CO2 emissions. The new rules will see brand new electric cars registered on or after April 1st 2025 pay £10 in the first year, rising to £165 in subsequent years. Older EV models registered between 1 April 2017 and 31 March 2025 will pay the standard £165 fee. Low emission and zero emission cars first registered between 1st March 2001 and 30th March 2017 will move to £20 a year.
100% exempt from ULEZ and Congestion Zone charges
Electric cars emit zero exhaust emissions which means they are 100% exempt from ULEZ and Clean Air Zone charges. The daily charge for driving in London’s Ultra Low Emissions Zone as of August 2023 is £12.50. So, if you have lots of business in London, it’s easy to see how this cost could build to around £3,500 per year for daily use.
ULEZ isn’t the only road charging scheme in London. Drivers of electric and diesel cars that emit over 75g/km of CO2 face Congestion Zone fees of £15 a day – while electric cars are again exempt from all charges until December 2025.
Other cities around the UK have introduced their own chargeable Clean Air Zones including Aberdeen, Bath, Bristol, Bradford, Glasgow and Portsmouth. Similar schemes are also in consultation in Cambridge, St Albans, Warrington and Wokingham.
EV Maintenance
Electric cars have fewer moving parts that can become damaged or worn down, plus regenerative braking which places less strain on the brakes reducing the upkeep further.
EVs don’t require diesel particulate filters or additives such as AdBlue, both of which come at a cost. So much so, that Go Ultra Low – from the UK Government – once estimated that an electric car’s maintenance costs will be around 70% less than those of diesel or petrol cars over its lifetime.
ElectriX work with CBVC to offer a maintenance package in the monthly lease cost so, it’s less likely you’ll have to worry about having to lose time or money getting your car fixed.
The cost of charging an electric car versus filling up
According to Fleet News in March 2024, UK average petrol prices were 143.49p per litre while diesel was more expensive at 152.69p per litre. Resulting in pence per mile costs of around 19p for a large 2000cc vehicle.
In the same month the average home electricity costs were priced on average at 30p per kWh. Meaning a typical large-size electric car (such as a Tesla Model 3) would cost around 11.1 per mile. This cost would come down to just 5p per mile at off-peak times, read more about when electricity is cheaper.
The average rate for medium sized businesses during the same period was a comparable 29.8p per kWh. Business leasing customers who provide on-site charging at their premises may also benefit from tax deductions, and some local authorities may incentivise this further – saving electric company car drivers even more money.
Compare the average cost per mile for an EV
Petrol
Diesel
Electric
19p
19p
5p per mile (off-peak)
When it comes to rapid public chargers, prices are generally more expensive at up to 25.7p per mile, but conversely, some also enable drivers to top-up for free. You can read more about charging an electric car at The Ultimate Guide To Electric Car Charging
Claiming mileage back with electric business leasing
AER stands for Advisory Electricity Rate and is set by government. It applies when a company reimburses an employee for business travel in a company car, or where an employee is required to repay the company for personal travel in a company car.
On September 1st 2023, the advisory rate for fully electric cars was 10 pence per mile. As the price of electricity fluctuates, so do the recommended rates. To keep up to date and check the value of previous rates, take a look at the Gov.co.uk website.
Of course, companies are not constrained by the advisory rate. Should they choose to, they can pay more than 10 pence per mile, by providing the required evidence to HMRC.
Key considerations for business electric car leasing
To make it easier for you when navigating the journey to electric, we recommend you consider three important factors before making the switch: range, charging and car maintenance.
Choosing the right company electric car
Different businesses will also require different types of electric cars based on the services they operate. Depending on how many miles you or your employees drive will likely dictate the EV range that most suits you. Cars with bigger batteries typically have higher range – many big battery cars can now travel over 350 miles on a single charge. You can read more about range here. It’s a general rule of thumb that the bigger the battery the bigger the car and the higher the cost or monthly lease cost.
Driving performance is often not as important in EV’s because even smaller electric cars tend to be quicker than many big mainstream petrol or diesel models – but for comfort on longer journeys you might choose a more spacious model. Most EV’s have advanced technology and supporting apps designed to help with journey planning, helping you locate the right charger in the right location during your business trip – you can compare features on the EV database.
The advantage of leasing an electric car for your business means you have the potential to try out brand new cars for at least 24 months and if new technology becomes available or your business needs change you can easily switch to a different model without any concerns over depreciation or time-consuming disposal. ElectriX can help you choose the right car by completing the online car quiz.
Electric car charging
Besides public charging stations, you will also need to think about other charging options for your business electric car. An effective and accessible charging infrastructure is essential for maximising the benefits of electric car mobility and ensuring seamless operations for your business fleet.
Businesses can implement smart charging solutions at the workplace to optimise charging schedules, minimize energy costs, and maximize charging efficiency. Or employees can consider a home charging solution. You can find up to date information on government grants for EV workplace charging in the UK here. For employees who would like a home charger installed, we partner with Indra to provide a seamless smart solution.
Maintenance package for leasing electric cars
Our EV leasing partner CBVC offers a business electric car lease package with maintenance covering routine servicing and repairs, leaving you free to focus on your other priorities without worrying about unexpected costs.
In summary, there are many financial and environmental benefits to both your business and your drivers if you choose electric car business leasing. Lower corporation tax, VAT savings and significantly lower BiK rates and running costs. Your business will become more sustainable and reduce the impact of business travel on the environment.
ElectriX can offer advice and support on all aspects of business leasing, visit our learn section or get a quote for a business electric car lease here.
Explore electric cars today
Discover electric cars that are available through our partner CBVC today.
The Tesla Model Y was the UK’s biggest selling electric car in 2023, with the Tesla Model 3 in 4th place. While in 2023, the Model Y retained its place as the world’s best-selling model – only the second time ever for an all-electric car.
As other major manufacturers innovate their own electric vehicles, what is it that makes Tesla the one to beat? And why is Tesla leaving traditional hybrid, petrol and diesel company cars far behind?
Leading the charge for electric vehicles since 2003
Tesla is the world’s first ground-up EV company. It was incorporated as Tesla Motors in July 2003, its name inspired by inventor and electrical engineer, Nikola Tesla. In 2004, Elon Musk became the company’s largest shareholder and in 2008 Tesla announced its mission to accelerate the move to sustainable energy and transport, through electric vehicles and solar power.
Fast forward 15 years and in 2023, Tesla is one of the planet’s largest companies and the world’s most valuable automaker. Even in the face of increased competition, Tesla leads the battery electric market with over 50% share. And in the second quarter of 2023, the company announced record new car deliveries. They are at the forefront of electric vehicle technology. With their innovative designs, long-range batteries and powerful performance, Tesla appeals to drivers who want to drive electric while still enjoying aesthetic desirability and exhilarating driving experiences.
Starting with one model, the Roadster in 2008, the company has grown its range to offer four models today – the Tesla Model X, Model S, Model 3 and Model Y.
Model X
326 miles range
0-60 in 2.5 seconds
1,020 hp
Left-hand drive SUV
Model S
359 miles range
0-60 in 1.99 seconds
200 mph top speed
1,020 hp
Model 3
390 miles range
0-60 in 4.2 seconds
All-wheel drive dual motor
Model Y
331 miles range
2,100 litres cargo
All-wheel drive dual motor
Supercharging the benefits of choosing Tesla
Tesla recognised the importance of charging very early on and has invested heavily in creating an extensive Supercharger Network. That’s why in 2023, they owned and operated the largest global, rapid charging network in the world with over 50,000 public superchargers and more than 1,000 in the UK alone in over 100 different locations.
Superchargers enable Tesla drivers to simply plug-in and top-up their cars conveniently and quickly. And this can add up to 172 miles of range in just 15 minutes. Through the smart app they can navigate to the nearest site, see plug availability and charge status – meaning drivers are free to grab a coffee and do something far more interesting.
Tesla drivers who use the Supercharger network pay for their charging sessions on a pay-as-you-go basis and only pay for the power they use when topping up their battery. In fact, the average price per kilowatt hour (kWh) for a Supercharger in the UK is 67p (2023), but Tesla owners who subscribe to the £10.99 per month membership are charged around 53p per kWh.
Up until 2022, Tesla drivers had exclusive use of the Supercharger network. But now, thanks to Tesla opening up part of their network to all electric car owners, they have to share. While the company has stated that queue times are continually monitored, it’s natural that Tesla drivers now have to wait longer to top-up their cars.
Reading Tesla owner forums, it’s clear that while some feel it negatively affects the ownership experience, many more agree with the company that driving EV ownership as a whole can only be good for the industry and the planet.
Doing the business for company car drivers
One of the main reasons why Tesla cars are so popular with company drivers is how simple they make the transition to battery electric. There is no compromise on style, performance, sustainability and ease of ownership.
The Tesla brand is synonymous with innovation, luxury and exclusivity. It appeals to a wide range of company car drivers, broadening its appeal. From those who prioritise the environment to tech enthusiasts.
Tesla vehicles are known for delivering a great driving experiences. Models like the Model S Plaid and Model 3 Performance have broken records and challenged the notion that electric cars are slow or lack excitement.
And what about Tesla battery size?
Bigger batteries mean longer range capabilities. All models in the range can now travel over 300 miles on a full charge, making them perfect for company car drivers who very often travel long distances between meetings and appreciate fewer charging stops. Whilst battery degradation, or rather the loss in capacity and range over time and increased mileage, is a big concern for many drivers. Tesla has recently explained that its batteries only lose around 12% of capability after 200,000 miles.
Leaving a staggering 88% of battery life for the next few hundreds of thousands of miles – and ensuring Tesla battery replacement cost isn’t something drivers need to worry about.
Reliability is a big win. Tesla’s reputation for quality and reliability has boosted its popularity, and according to data from various sources including Consumer Reports, Tesla vehicles consistently rank among the highest in terms of owner satisfaction and reliability. Helping to build a loyal customer base that is willing to pay a premium for Tesla’s products.
Of course, for many drivers, their vehicles are also their workplaces. Tesla’s spacious, comfortable interiors feature advanced on-board technology. For example, its Autopilot driver assistance system with automatic parking and touchscreen display with in-built YouTube and Spotify. While their over-the-air software updates provide continuous improvement, boosting the ownership experience.
While cost is of course a major consideration (discussed in more detail below) aesthetics or driveway appeal is significant. Tesla cars have their own unmistakable wow factor.
Why choosing Tesla can pay dividends
Many company car drivers and their organisations choose electric for both its environmental benefits and tax incentives. Tesla vehicles are fully electric, emitting zero tailpipe emissions which mean they are exempt from Vehicle Excise Duty, Ultra Low Emission Zone charges and Clean Air Zone fees.
Drivers can also take advantage of 2% Benefit in Kind (BiK) rates that are fixed until 2024/25 and compare very favourably versus traditional petrol or diesel BiK rates between 20-37%. Since electricity is not classed as a road fuel, Tesla cars have no fuel benefit charge. That means employees are exempt from paying Benefit in Kind on electricity provided by their employer to charge an electric company car.
First Year Allowance is also claimable for up to 100% of the cost of qualifying low emission and electric cars. By choosing a Tesla car, businesses can claim a 100% year one deduction for the cost of the vehicle.
Over the last few years, Salary Sacrifice has grown in popularity. Meaning company car drivers can save up to 40% on the price of a new Tesla, simply by deducting their lease fees from their gross salary, before tax and NI contributions are applied. Businesses themselves may also benefit from reduced National Insurance contribution payments from the scheme.
While the upfront cost of a Tesla is generally higher than its competitors, they offer significant costs savings over time, including lower running, servicing and maintenance costs. A significant benefit for businesses with large fleets in particular. The company’s investment in battery technology and its introduction of the Gigafactory network has resulted in increased range, improved performance, greater longevity and reduced costs.
Lease a Tesla with ease
Tesla’s commitment to sustainability, advanced features and technology, impressive performance and range, as well as its long-term cost-effectiveness, make it the perfect car for company car drivers.
By choosing a Tesla, company car drivers can align their transportation choices with their organisations’ sustainability goals, enjoy state-of-the-art technology and convenience, experience thrilling performance, and save costs in the long run.
Powered by LV= General Insurance, we work with specialists CBVC to offer a wide range of the latest electric cars, with over 100 models from more than 30 leading manufacturers – including Tesla. With many available from stock within just 30 days. We partner with Indra to provide convenient home chargers to energise every journey.
The UK Government announced on the 20th September 2023 that from 2035 onwards the sale of new petrol and diesel cars will be banned. This has huge implications for any business, large or small, that has a vehicle fleet and a Business Contract Hire (BCH) agreement.
Transitioning to an business electric vehicles for your fleet, fully or partially might seem a daunting proposition, so it’s important to look at what this might entail.
Firstly, the existing petrol and diesel vehicles in a fleet can be returned in a process of “natural wastage” as the contract for each one comes to an end, so it’s not a matter of going electric overnight, electric could be phased in.
ElectriX and its leasing partner, CBVC, will be happy to discuss your needs. CBVC is able to supply almost all makes and models of electric car in pretty much any number, tailoring the vehicles to your business’ requirements.
Charging business electric vehicles
Charging can be a factor that sometimes makes both businesses and individuals hesitant about buying or leasing an electric car. But some models now have a range of over 300 miles, though these will probably be within the higher price range, but many cheaper models will do 200-250 miles on a single charge.
Developments in battery technology mean there will be a gradual improvement to the range of cars as they come onto the market.
If your business is switching its vehicles to electric, you may need to think about installing charge points at your employees’ homes and/or your business premises. ElectriX can help you with the installation of Indra smart chargers for employees’ homes. Anyone with an electric car should also consider their electricity provider’s tariffs and whether it’s worth switching to an EV-friendly, off-peak energy tariff, which makes it cheaper to charge overnight.
Sustainability
Switching to electric vehicles will help to boost your business’ sustainability credentials. Sustainability ratings are taken seriously by investors, shareholders and regulatory bodies, and compliance criteria such as carbon footprint is likely to become better defined over the next decade. Going electric makes a firm statement about your business’ commitment to the future of the environment.
Cost savings
You will also save money. Leasing electric cars works out significantly cheaper than buying them, with the high purchase price and all the depreciation that entails.
Electric vehicle mileage rates can be as cheap as 2p per mile (as at Feb 2024) if your employees can charge at home on an EV-friendly, off-peak tariff. Electrifying your fleet will eliminate your reliance on fossil fuels and possibly lessen your company’s risk to hikes in fuel prices. You and your employees will save on tax too, with Benefit-in-Kind (BIK) tax fixed at 2% until 2025. It will then increase by 1% per year until 2028, when the figure will be reviewed.
If you think your company is ready to consider going electric, you may want to canvas employee opinions by running a short survey to understand how attractive driving electric cars might be. So here’s a quick summary:
ElectriX and CBVC can help with advice on all aspects of making the switch to electric. Find out more about the range of cars we have available for your electric car Business Contract Hire scheme.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
Electric company cars are increasingly popular with employers and employees. From helping to support your organisation’s sustainability goals to attracting and rewarding staff. But it’s the cost savings, from benefit in kind tax and car tax to exemption from congestion charging and lower running costs, that really make sound business sense. Here’s why it could pay to choose an electric company car.
Benefit in Kind (BiK) is a tax on employees who receive benefits or perks on top of their salary. If you have the use of a company car for private use, you will have to pay a BiK contribution, also known as company car tax.
Every car has a BIK rating based on CO2 emissions, and a P11D value, which is the list price, including extras and VAT, but without the first-year registration fee and vehicle tax.
The current company car tax rate for electric cars is just 2% fixed until April 2025, compared to up to 37% for some diesel cars. The rate is set to increase, but by just 1% each year until it reaches 5% in April 2028 – still way below that of petrol and diesel cars.
Car tax for electric company cars
Until April 2025, owners of electric cars are exempt and pay zero car tax, while drivers of petrol and diesel cars must pay an annual fee based on their CO2 emissions.
The new rules will see brand new electric cars registered on or after April 1st 2025 pay £10 in the first year, rising to £165 in subsequent years. Older EV models registered between 1 April 2017 and 31 March 2025 will pay the standard £165 fee. Low emission and zero emission cars first registered between 1st March 2001 and 30th March 2017 will move to £20 a year.
ULEZ and Congestion charge for electric company cars
Electric cars emit zero emissions which means they are 100% exempt from ULEZ and Clean Air Zone charges. The daily charge for driving in the zone as of August 2023 is £12.50, so if you have lots of business in London, it’s easy to see how this cost could build to around £3,500 per year for daily use.
Until December 2025, electric cars are also exempt from London’s Congestion Zone saving £15 a day. However you will have to register your vehicle in order to avoid the charge.
While ULEZ and the Congestion Zone is unique to London, other cities around the UK including Bath, Birmingham, Bradford, Bristol, Portsmouth, Sheffield and Tyneside are introducing their own chargeable Clean Air Zones. By switching to an electric company car, you can drive freely across the country.
Whole life costs for electric company cars
Whole life costs can lead to big savings for electric company cars.
Take the example below based on an average 20,000 miles business lease from CBVC. The ‘fuel’ costs per mile are considerably cheaper. Which can result in significant savings – especially if you’re driving long distances on business.
Then there’s maintenance and repairs. Electric cars have fewer moving parts that can become damaged or worn down, plus regenerative braking which places less strain on the brakes. All of which generally means less maintenance, downtime and costs. EVs also don’t require diesel particulate filters or additives such as AdBlue, both of which come at a cost. So much so, that Go Ultra Low – from the UK Government – once estimated that an electric car’s maintenance costs will be around 70% less than those of diesel or petrol cars over its lifetime.
Running costs for electric company cars
So how do electric company cars compare when it comes to charging up versus filling up?
For both convenience and cost effectiveness, you’ll want to charge your car at home. To make the biggest savings, you’ll charge your car overnight off-peak, when the cost of electricity is less. But since these off-peak prices are variable, we’ll be using the average standard tariff price per unit, which in December 2023 was 27.35p per kWh.
You can work out how much charging is costing you by following a simple calculation:
Battery size x Unit price of the electricity per kilowatt-hour (kWh) So, let’s use the example of a Kia Niro EV which has a 64.8kWh battery and can travel up to an advertised 285 miles on a single charge. Based on the average cost of electricity in December 2023 of 27.35p per kWh, a full charge of the Niro EV will cost you: 64.8 x 27.35 = £17.72
When it comes to rapid public chargers, prices are generally more expensive, but conversely, some also enable drivers to top-up for free.
Business Contract Hire
If you’re a sole trader, limited company or partnership who want to lease vehicles rather than own them, Business Contract Hire is for you. Lease an electric company car or a fleet through your business, and you could save on everything from National Insurance to VAT.
Generous savings on employers’ Class 1A National Insurance
50% back on VAT on vehicle payments and 100% VAT for maintenance (VAT registered companies only)
2% fixed driver BiK rates until 2025
Small upfront costs from just one month in advance
Lower running costs when compared to diesel or petrol equivalent
Salary Sacrifice
If you think leasing means a lump sum upfront, think again. With Salary Sacrifice there are no upfront costs to employers or employees. Electric car salary sacrifice is a tax-efficient way to save up to 40% on brand-new electric cars. The lease fee is deducted at source from gross salary, saving on tax.
Great for employees:
2% Benefit in Kind (BiK) rates until 2025 – compared to some diesel cars at 37%
100% exemption from ULEZ and clean air zone charges
Average savings of £732 a year on fuel compared to petrol and diesel cars (based on 8,000 miles)
Average 47% savings on maintenance and insurance
Great for employers:
No upfront costs
Save 13.8% (15% from April 2025) on National Insurance on the amount sacrificed by your employee
Market-leading risk protection in case employees leave
Popular electric company cars
At ElectriX, we partner with electric lease car specialists CBVC who offer a choice of over 100 models, from more than 30 manufacturers. Here is a quick guide to some of their most popular models – many available within just 30 days.
