- compiled by Mark Humphreys, FCA Compliance Manager at Planet Leasing Ltd
How can businesses save on their fleet vehicles?
Recent legislative changes in the way that electric vehicles are taxed by HMRC could result in a huge uptake in business fleet numbers. On 9th July 2019, HMRC announced that the BiK (Benefit in Kind) rate for zero-emissions vehicles will drop to 0% for the 2020/21 financial year, rising to 1% in 2021/22 and 2% in 2022/23. These new rates will also retrospectively apply to cars already registered before 6th April 2020, when the new rates officially come into effect.
Plug-in Hybrid Vehicles (PHEVs) will also benefit from preferential tax-rates due to their low CO2 figures these tax-rates will be based on a sliding scale. The greater the full electric-only range of the vehicle, the lower the BiK rate.
What are the benefits of the lower BiK rate?
Due to these new tax-rates for full EVs, driving a fully electric company car has suddenly become far more attractive, for both the employer and the employee…even more so for those who offer, and make use of, salary sacrifice schemes. Some companies have reported a 50% saving for employees on the monthly cost of their car. At the same time, employers will enjoy significant financial benefit from this arrangement as well (at no implementation cost!) whilst making (for most) a long-overdue commitment to tackling climate change and local air pollution levels. Zero emission vehicles are also exempt from congestion and ULEZ charges which represents even bigger savings.
What about the issues with battery supply and the charge-point infrastructure?
Whilst the perceived hurdles of battery supply and range anxiety are still, according to ABI Research, the biggest barriers to the large-scale adoption of EVs, massive strides have recently been made in these areas.
The manufacture of batteries at new, so-called ‘GIGAFactories’ are currently projected at being able to build enough batteries to supply 300,000 vehicles per year – well on track for the BVRLA-promised figures of 300,000 EVs per year by 2025. Likewise, government investment in enlarging the national charging point infrastructure, coupled with advances in rapid-charger technology (for example a 350kW rapid charger would be good to load a 220-mile range onto a compatible vehicle in about 10 minutes), mean that real-world range anxiety is set to become a thing of the past.
As a further bonus, thanks to another set of new legislation, all rapid chargers installed from 2020 onwards will have to support contactless credit-card payments, negating the need to be locked into various charge-point networks or having to carry the various associated RFID cards. This payment option can also be retro-fitted to the existing network, with BP Chargemaster already leading the way in the UK, retro-fitting this technology to its existing rapid chargers.
Will EVs be the future backbone of the UK motor and transport industry?
Well, in this era of the slow-burn uptake of EV vehicles, the transition to this eventuality still seems to be quite far off…but with the above-mentioned legislation, manufacture and supply, and technology changes coming into effect, the tipping-point where EVs will become the vehicle of choice for the majority of businesses has certainly been brought forward quite significantly.
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