The advent of the electric car is being hailed as a driving force behind a new green revolution on our roads.
Figures reported this month reveal that they are still a small part of the motor market – something in the region of 3.5 per cent of the total.
And more than 64 per cent of those vehicles are described as plug-in hybrids rather than pure electric.
But the figures are rising, with carmakers set to launch even-greater numbers and industry watchers predicting 2018 will be the best year yet for new models.
And as their speed and driving range increases – the pure electric car is being seen as the vehicle of the future.
Unlike a hybrid car—which is fuelled by petrol and uses a battery and motor to improve efficiency—an electric car is powered exclusively by electricity.
Electric cars produce no tailpipe emissions, reduce our dependency on oil, and are cheaper to operate.
They have both financial and environmental advantages – there are also considerable tax benefits for getting behind the wheel of one:
General Tax Benefits
Benefit in Kind
Cars producing 0-50 g/km of CO2, such as electric cars, have an appropriate percentage of 7 per cent (2016/17) which will increase to 9 per cent (2017/18), 13 per cent (2018/19) and 16 per cent (2019/20). This rate is expected to fall to two –per cent in 2020/21 and it is possible that the earlier rates could fall correspondingly.
This compares favourably with percentages of up to 37 per cent for cars with higher CO2 rates. There are potentially significant annual tax and national insurance savings to be achieved by having a car with a lower CO2.
UK Plug-in Car Grant
Currently the government is running a plug-in car grant to encourage motorists to purchase ultra-low emissions cars by offering a grant of 35 per cent towards the cost of the vehicle, up to a maximum of £4,500.
There are three grants available:
- Category 1 cars – these vehicles have CO2 emissions of less than 50g/km and can travel at least 112km (70 miles) without any CO2 emissions at all.
The grant will pay for 35 per cent of the purchase price for these vehicles, up to a maximum of £4,500.
- Category 2 cars – these vehicles have CO2 emissions of less than 50g/km and can travel at least 16km (10 miles) without any CO2 emissions at all. The grant will pay for 35 per cent of the purchase price for these vehicles, up to a maximum of £2,500.
- Category 3 car (Mercedes-Benz E350 e AMG Line) – this vehicle has CO2 emissions of 50 to 75g/km and can travel at least 32km (20 miles) without any CO2 emissions at all: The grant will also pay for 35 per cent of the purchase price for these vehicles, up to a maximum of £2,500.
The 100 per cent First Year Allowance (FYA) for businesses purchasing low emission cars is being extended for a further three years to April 2021.
From April next year, only cars with CO2 emissions of 50g/km or less will qualify for FYA (currently 75g/km).
And from the same date, the CO2 emissions threshold for the main rate of capital allowances for cars will be reduced from 130g/km to 110g/km.
First Year Allowance is an ‘Enhanced Capital Allowance’, meaning the cost of a new electric car bought by a business can be entirely offset against businesses profits in the first year.
The rules and rates are ever changing; it is therefore recommended that professional advice is sought before making any purchase.
To discuss this and any other issues raised in this article please contact me on 01772 430000