One of the most common questions I receive from our clients is “Shall I purchase a car through my business”? My response is always:
Look at the facts, count the costs and study the Tax implications.
This is because successive governments have increased taxation on cars and fuel, which has made it very expensive to run a standard or expensive car through your business.
I have often then asked: – “Have you thought of buying an eco-friendly vehicle through your business”?
The response I often hear is not positive, as inevitably clients often think of the early Eco-friendly vehicles such as the G-Whizz (Look it up). Unfortunately not only is this vehicle “pokey” (it looks like Postman’s Pat van), but has a very limited battery life.
But when you actually look into the ever growing and developing Eco friendly car industry, coupled with the potential tax benefits, perhaps buying a “Eco” vehicle isn’t such a bad idea?
Take for example EREC’s (Extended Range Electric Cars)
The BMW i3 and Vauxhall Ampera has brought the idea of EREC’s into the mainstream. Unlike traditional electric cars that are just run on batteries, these vehicles rely on both petrol engines and batteries. These hybrid vehicles have their own on board generators.
These cars are clever due to the way the engine deals with both long and short trips. For short tips the battery comes into its own. Batteries can be charged from a standard 240v outlet, which is ideal for journeys between 30 and 80 miles. For longer journeys a petrol input runs the on-board generator giving you a much longer range. In a hybrid vehicle the car cleverly switches between both.
But are they economical? The simple answer is yes. Depending on your energy tariff the cost of charging the battery could be as little as £1, equating to a fuel cost of approximately 2p per mile.
What’s more, the cars come with everything you need to charge the battery, and the charge time is about 6 hours from a standard 240v / 10A electrical socket.
Obviously there are some drawbacks such as limited design of available vehicles and ensuring that you remember to charge your vehicle but there are also a number of additional benefits to note.
- Zero vehicle duty to pay (Road Tax)
- Minimum benefit in kind to pay for employees
- 100% discount for the London Congestion Charge (CC)
- First year capital allowances benefits of 100% set against business profits.
- Reduced company NIC (sub 75g / km CO2)
- Environmentally friendly.
- The vehicles qualify for the government Plug-in car grant of 25% of the cost up to £5000. (Note:- An application must be made at the point of sale by your car dealership).
Although you may not be won over by the information provided in this blog and immediately go out and purchase an Eco-Friendly vehicle, whether we like it or not these vehicles are here to stay. With changing green legislation along with the need to use renewable energies I believe these are the cars of the future. Therefore why not capitalise on current tax savings now on the technology of the future.