There are lots of advantages for switching to electric car leasing for your business, but it’s the cost savings on Benefit in Kind (BIK) and VAT that really make sound business sense.
How to save on BiK
Every employee who has the use of a company car for private use has to pay a Benefit in Kind (BiK) contribution. On some diesel and petrol cars, this rating – partly based on CO2 emissions – can be as high as 37%. On electric cars it is just 2%, fixed until April 2025. While this rate is set to increase by 1% each year until it reaches 5% in April 2028, it is still way below that of petrol and diesel cars. In the example below a 40% taxpayer could save £4,640 per year.
|List price:||BIK rates & taxable amount:||Basic rate taxpayer @ 20%||Higher rate taxpayer @ 40%|
|Electric Car||£40,000||2% = £800||£160 pa||£320 pa|
|Petrol Car||£40,000||31% = 12,400||£2,480 pa||£4,960 pa|
Save on VAT
On electric lease cars for business, you can claim back at least half of the VAT on the lease payments, and if your business pays for the repairs and maintenance of its business EVs, then all VAT you are charged is recoverable as input tax.
And there is more… you’ll also save on powering your car or van compared to fossil fuels, and enjoy the charge-free Ultra Low Emissions Zone (ULEZ) and Clean Air Zone (CAZ) charges in cities.
ElectriX is part of LV = General Insurance and is on a mission to make driving electric cars easy. Our leasing partner CBVC, provides a range of executive cars, as well as pool cars and vans. Choose from over 100 models across more than 30 manufacturers. Search cars here.