Insights / Incentives for commercial electric fleets

Grants, subsidies and incentives for commercial electric fleets

29th January 2021

Thinking about going electric? We don’t blame you. Electric vehicles (EVs) are the future of driving and key to a zero-carbon future.

Despite their reputation for being expensive, EVs are becoming increasingly affordable for businesses.

When you consider the total cost of ownership (TCO) – that’s the upfront cost and all running costs such as insurance, fuel, and tax – EVs are often the most cost-effective option for a fleet.

What’s more, there are many grants, subsidies and incentives available to help boost your budget.

We update this list every few months to make sure you’ve got the guidance at your fingertips.

Grants for electric vehicles and EV charging infrastructure

Plug-in car grant

35% of the purchase price, up to £3,000 (only applies if vehicle is fully electric and costs less than £50,000 including VAT and delivery fees).

Plug-in taxi grant

20% of the purchase price, up to £7,500.

Plug-in van grant

20% of the purchase price, up to £8,000.

Plug-in large vans and trucks grant

20% of the purchase price, up to £20,000 (only available for the first 200 orders placed and grants at the £20,000 rate are limited to 10 per customer. After the 200-order limit is reached, a maximum grant of £8,000 will apply).

A full list of all eligible vehicles for the plug-in grant can be found here.

Electric Vehicle Homecharge Scheme

Up to £350 (including VAT) off the cost of installing a charger at home (overview, eligibility and how to claim can be found here).

Workplace Charging Scheme

Up to £350 per socket (40 sockets max) at 75% of the total cost of installation. Maximum possible grant of £14,000 (guidance and application process can be found here).

Subsidies and incentives for commercial electric vehicles

Lower Benefit-in-Kind tax - cars

EV company car drivers pay less Benefit-in-Kind (BiK) tax (0% until April 5th 2020, then 1% 2021/22, and 2% for 2022/23, 2023/24 and 2024/25).

0% Vehicle Excise Duty (VED)

Pay no VED (otherwise known as road tax) for electric vehicles for first and second year onwards payments. This includes EVs which cost £40,000 or more, as they are excluded from the “expensive vehicle supplement”. See vehicle tax rates here.

Reduced Van Benefit Charge – Vans

Van Benefit Charge (VBC) is set to £nil for 2021/22 (from 6 April).

First Year Allowances for Business Cars

From April 2021, the government will extend first year allowances for zero-emission vehicles only and apply the main rate writing down allowance (WDA) of 18% to cars with emissions up to 50g/km. First year allowances for zero-emission goods vehicles will also be extended.

This means if you can claim capital allowances on cars you buy and use in your business and can deduct part of the value from your profits before you pay tax. See all capital allowances here.

Congestion Charge exemptions

Electric vehicles are exempt from paying the charges associated with Clean Air Zones (CAZs) or London’s Ultra Low Emission Zone (ULEZ).

Free in-city parking

Some towns and cities provide free EV parking, including:

  • Milton Keynes
  • Dundee
  • Some London boroughs, including Westminster, Islington, Barking and Dagenham, Hounslow and Richmond Upon Thames
  • Sheffield

Lower fuel costs and employee mileage reimbursements

EVs are cheaper to run than traditionally fuelled vehicles, typically costing around 2p per mile. Not only is electricity cheaper than petrol/diesel, you don’t need to pay Fuel Duty on it either. Many employers also use the HMRC Advisory Electricity Rate (AER) currently set at 4p per mile for company car charge cost reimbursement.

Workplace EV Charging Tax Exemption

In certain circumstances where an employer provides workplace EV charging, no taxable benefits will arise. The exemption applies regardless of whether the employee uses the “fuel” (electricity) for business use, personal use, or both. See conditions here.

Tax relief for electric charge points

EV charge points are eligible for the super-deduction, announced during the Spring Budget 2021. Because charge points are considered plant and machinery, businesses can claim for Capital Allowances, such as the 130% super-deduction, for expenditure on electric charge point equipment.

This allowance will run from 1st April 2021 until 31st March 2023. See conditions here.

At Drax, we can support you in finding out what grants, subsidies and incentives are available for your business fleet. Get in touch using our contact form.

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