Do Electric Cars Offer Tax Savings?

May 14, 2024

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In the bustling heart of London, where businesses and tech start-ups are growing, change is in the air. As the owner of Price & Accountants, I’ve seen first-hand how new ideas can make a difference. One big change we’ve noticed is how many people are talking about electric cars. These aren’t just cool new gadgets; they’re a smart choice for businesses and individuals. Why? Because there are big savings, especially with electric car tax in the UK.

Understanding the UK’s Green Plans

The world is worried about our climate. The UK wants to help and has promised to make big changes by 2050. Cars that use petrol or diesel produce a lot of pollution. This is why electric cars are so important. The government has even said that by 2030, no more new petrol or diesel cars can be sold. By 2035, every new car must be zero-emission, which means no pollution at all.

A Vision for Emission-Free Roads

The shift to EVs isn’t just a casual suggestion; it’s a well-planned vision that’s gaining traction. The Committee for Climate Change (CCC) declared in May 2019 that all new vehicles should be electrically propelled by 2035 or sooner. This stance is aligned with the ambitious goal of achieving net-zero emissions. Encouraged by this, the UK Government took action, announcing the phasing out of new petrol and diesel car sales by 2030. A subsequent commitment emerged: all new cars and vans sold in the UK will be zero-emission by 2035.

Clearing the Air of Pollution

With air pollution reaching alarming levels, road transport’s role as a major source of pollutants is undeniable. From Nitrogen Oxide (NOx) emissions contributing to roadside concentrations to particulate matter (PM) and volatile organic compounds (NMVOCs), the urgency for cleaner alternatives is glaring. EVs present a transformative solution, reducing these pollutants and contributing to cleaner air for all.

Why is Everyone Talking About Electric Cars?

Everyone wants clean air. Cars that run on petrol or diesel make the air dirty. Electric cars help make the air cleaner. Plus, they can save people money. For businesses, using electric cars means big savings. This is because of the electric car tax benefits in the UK. Just think about it: a business owner who chooses the best company car that’s electric will pay much less tax. And if you’re wondering how much will electric car tax be, in 2023/24, it’s only 2% of the car’s price.

Unlocking Financial Benefits: Tax Advantages for Businesses

The allure of electric vehicles extends far beyond their environmental credentials. Fleet operators, whether from the public or private sector, as well as individual car owners, stand to gain substantial financial rewards by embracing this revolutionary shift. The inherent cost-effectiveness of electricity as a fuel, compared to traditional fossil fuels, translates to notably lower operating costs per mile. Moreover, the inherent mechanical simplicity of EVs leads to reduced maintenance requirements, resulting in diminished servicing expenses. This financial edge, complemented by enticing tax incentives, crafts a compelling case for businesses to transition to electric vehicles. The appeal of tax savings, in particular, holds undeniable sway.

In 2023/24, directors and employees driving fully electric company cars will be subject to a mere 2% tax rate based on the vehicle’s list price.

David’s Smart Choice

Let me tell you about David. He’s a tech business boss. David got a new electric company car, the Audi Q4 e-tron. This car didn’t cost David a lot in tax. Why? Because it’s electric. David said, “I love my new car. It’s great to drive and saves me money. This year, my electric car tax is only 2% of the price. That’s just £1,020!” And if you’re curious about the exact savings, the good folks at ‘Accountants in Holborn’ have an electric car cost calculator. This tool is a must for those considering the company car scheme with electric vehicles.

Comparative Analysis: A Clear Advantage for EVs

A comparison of three car models — Tesla Model 3 Long Range AWD, BMW 2 Series Coupe M240i, and Mercedes-Benz E-Class Estate – E 300 Hybrid underscores the EV advantage:

Analysis: The Electrifying Choice

The numbers don’t just speak; they shout the benefits of electric vehicles. With benefit-in-kind (BIK) tax values and corporation tax savings distinctly favoring EVs, the financial wisdom of this choice becomes crystal clear. EVs not only contribute to cleaner air and a greener environment but also propel businesses towards substantial financial gains. As an advocate for small businesses and tech start-ups, I encourage fellow business owners to seize this opportunity, making a prudent investment in EVs that promises a cleaner, greener, and more prosperous future.

Making the Switch to Electric

So, do electric cars pay road tax in the UK? The simple answer is they enjoy many tax benefits. If you’re thinking of getting the best company car that’s electric, there’s more good news. You can use an electric car cost calculator to see how much you can save. There are many benefits to using the company car scheme with electric cars. And if you’re still wondering how much will electric car tax be, it’s much lower than petrol or diesel cars. Also, with the guidance from expert accountants in Holborn, like Price & Accountants, the journey becomes smoother.

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Final Thoughts

Electric cars are the future. They help the planet and can save money. If you’re a business looking for the best company car, think electric. If you have questions, the accountants in Holborn are here to help. Let’s make a change for a greener future!