Energy efficiency and long term savings are the best ways to move into the future. Since most companies in the UK lease out cars to their employees and vehicles for their fleets, curbing costs, saving on taxes, and preserving energy can save much money.
The current technological, economic, environmental, and political condition in the UK suggests that Electric Vehicles (EVs) will slowly gain a strong foothold in the market. This shift change from Internal Combustion Engines (ICEs) to Electric Vehicles will potentially save businesses thousands of hard-earned pounds per annum. The UK company car fleet sector can easily consider switching from ICE to Battery Electric Vehicles (BEVs) within the coming half-decade.
Battery Electric Vehicles have an added cost of the P11D value or the leasing cost premium. This cost is over petrol or diesel vehicles that companies lease for employees. However, the whole life costs, including Service, Maintenance, and Repair (SMR), fuel expenses, taxes, and VAT, are lower in the long term for EVs.
Most businesses only see the immediate expenses of the monthly rental of the BEVs being higher than ICE vehicles, but fail to see the long term savings in terms of service warranties, fewer mechanical parts repairs, and lower electricity consumption than petrol or diesel costs. There are also several tax benefits from businesses shifting their company car to electric vehicles that can go up to as much as £1200 per car per annum.
Why go electric?
With the ever-changing world, businesses and individuals need to reduce their carbon footprint, while saving on costs and preserving fossil fuels. The environmental footprint is decreased with a reduction in air pollution, noise pollution, and the steady decline in the use of petrol and diesel for Internal Combustion Engines. Electric Vehicles are fast becoming excellent methods to battle the increasing global warming by allowing businesses to contribute positively towards saving the planet.
Businesses that go electric and switch out their company cars for electric vehicles can easily save thousands of pounds per year on service, repairs, and maintenance, increased warranties, better insurance, and reduction in petrol and diesel costs.
What are the benefits for employees?
A quick electric car charger installation can potentially save hundreds of pounds when employees claim 4p per mile. Charging EVs at workplaces and offices is exempt from tax, and allows higher savings. Drivers of electric vehicles can also save money on company tax when they choose to drive a BEV regularly instead of selecting an ICE vehicle. This tax is called Benefit In Kind (BIK) tax in the UK and is calculated based on the value of the car and annual salary.
As of 2020, there is an approximate 75% saving on fuel costs for employees opting to drive BEV cars. Some employees also actively participate in demand-side response schemes by leasing their charged batteries to power networks that are locally-based. Doing this helps them earn a little extra money.
Since tax laws do not recognize electricity as a fuel, employees driving pure-electric cars will be exempt from paying fuel benefit charges. This holds despite the mileage reading on the vehicle.
How does switching the company car fleet save money?
Switching the company car fleet to BEV has plenty of cost benefits attached. There are government subsidies for buyers that can go as high as £8000 for the purchase of electric vans and £3500 for electric cars. For fuel savings, nearly £2 – £4 electricity costs afford the same range as £15 – £16 of fuel spent. BEVs also provide relief in terms of rising service costs, taxes, and maintenance charges.
Electric cars are known to save thousands of pounds in vehicle fuel and tax over a period of five years as compared to ICE vehicles in the same term. Since electric automobiles have lesser parts than petrol and diesel cars, they also require less replacement and repair of parts. The only downside of driving an electric vehicle is that owners will have to find specialist garages for annual maintenance or opt for manufacturer service guarantees.
Exemption of Clean Air Zones (CAZ) charge
Clean Air Zones (CAZ) are soon becoming the preferred norm in the UK. Drivers face expensive fees on daily routes in populated areas. The schemes related to CAZs will continue to rise as the years go by, and most businesses will have to incur hefty charges. Electric vehicles are exempt from these charges as well as the daily congestion charge. Opting for Electric Vehicles could save the company as much as £6200 per annum per car.