Capital allowances allows a business to write down the cost of purchasing cars and vans against taxable profits.
Cars and vans with CO2 emissions of 50g/km or less are eligible for 100% first year capital allowances until April 2021.
For zero-emission vans, this benefit is limited to businesses that do not claim the government’s Plug-in Van Grant.
Vehicle Excise Duty
Battery Electric Vehicles (BEVs)
Since April 2020 zero emission EVs (BEVs) are zero-rated standard tax for both the first year and all subsequent years. That means you don’t pay any road tax on a pure electric vehicle.
Plug-in Hybrid Electric Vehicles (PHEVs)
PHEVs are now likely to cost between £0 and £100 for the first year depending on CO2 emissions – and then £140 each year thereafter.
A 'Premium Rate' applies to vehicles worth £40,000 or more. This is paid for the first 5 years the vehicle is on the road and is in addition to any applicable VED charges.
The Government’s Workplace Charging Scheme provides eligible businesses, charities and public sector organisations with support towards the purchase and installation costs of electric vehicle chargepoints.
The WCS grant is for £350 per chargepoint socket, for up to 240 sockets (per applicant business).
Are you eligible?
- Can be claimed by any business, charity or public authority (back claiming is not possible).
- You must have off street parking & be able to outline a business need for electric vehicle chargepoints.
- Your chargepoints must be installed by an OLEV-approved installer (like Pod Point).
- You must apply for a digital voucher and present it to your chosen installer.
Find out more on the Government WCS Grant
Electric Car Grant
Grants are available to reduce the initial purchase cost of eligible plug-in vehicles.
The Plug-in Car Grant offers 35% off the cost of a car, up to a maximum of £3,000 - Provided the car has CO2 emissions of less than 50g/km and can travel at least 112km (70 miles) without any emissions at all.
The Plug-in Van Grant offers 20% of the cost of a van, up to a maximum of £8,000.
Plug-in hybrid cars were eligible for a grant until October 2018, but these cars no longer qualify.
The grant is automatically deducted from the retail price when an eligible vehicle is purchased, so there is no additional paperwork to complete. OLEV list of eligible vehicles.
Company Electric Car Tax (BiK)
Company car tax, also known as Benefit in Kind Tax (BiK), is calculated based on the P11D value of the vehicle, its CO2 emissions and the employee’s income tax band.
At present, you can make significant savings by choosing a low or zero emissions plug-in vehicle over an equivalent petrol or diesel vehicle.
From April 2020, savings on pure battery and efficient plug-in hybrid electric vehicles will increase dramatically
|Vehicle CO2 emissions
| 0 g/km||16%||0%||1%||2% |
| 1-50 g/km (electric range >130 miles)||16%||2%||2%||2% |
| 1-50 g/km (electric range 70-129 miles)||16%||5%||5%||5% |
| 1-50 g/km (electric range 40-69 miles)||16%||8%||8%||8% |
| 1-50 g/km (electric range 30-39 miles)||16%||12%||12%||12% |
| 1-50 g/km (electric range <30 miles)||16%||14%||14%||14% |