Chamber Board Director and Partner at Thomas Westcott Chartered Accountants, Patrick Tigwell gives his take on whether now is the time for South West business owners to go electric with their business vehicles.
The question of whether to ‘go electric’ is probably the most asked question I am getting at the moment. As with most questions asked of accountants, the short answer is invariably ‘it depends,’ although it does clearly depend on individual circumstances, there are some great advantages which have come out of my discussions with clients, and which mean that business owners should be thinking about electric vehicles now.
Why move to EVs?
- Government policy – as part of its commitment to Net Zero by 2050, the government has banned the sale of new petrol or diesel vehicles by 2030 and hybrid vehicles by 2035. Although the second-hand market will continue after these dates, it is clear where the ‘direction of travel’ is headed
- Being ahead of the curve – because of this, business owners may feel that they want to go electric now rather than have it forced on them later
- Environmental considerations – this will be a major pull for business owners who may feel that the green benefits of EVs are such that this justifies the decision to go electric – certainly there are no harmful emissions as with petrol/diesel vehicles
- Low tax rates with vehicle benefits – if Government policy with the banning of petrol and diesel vehicles could be considered ‘the stick’, then the very low benefit in kind rates for EVs could certainly be considered ‘the carrot’ – consider the following example:
The point here is that getting an equivalent EV will mean you are taxed far less
- No fuel benefit – unfortunately HMRC don’t regard electricity as a fuel so there is no fuel benefit on private mileage
- 100% capital allowances are potentially available for the acquisition of EVs depending on the method of acquisition – this is a tricky area; I’d recommend consulting with a professional adviser before you sign on the dotted line.
- The cost of petrol and diesel is on the rise and at times, supply issues can cause extreme problems – I’m sure we all remember the recent tanker supply issues
- Compatible with ‘salary sacrifice’ – there is a great way in which EVs, and salary sacrifice can interact for employees. The employee takes a drop in salary but is provided with an EV as a benefit. Less tax and NI is paid by both the employee and employer.
- Alternative to ownership; There are flexible solutions available in the EV market that could mean you can enjoy the benefits of electric vehicles without necessarily owning one – fellow Chamber board director Helen Scholes and marketing manager of Co Cars has launched their new business membership offers which can be found here
Conclusion
Essentially, the business owner has to weigh up the pros and cons for themselves given their own particular circumstances but in talking to my clients, the conclusion is either a ‘yes to EVs now’ or a ‘yes in a few years’ so the bottom line has to be to talk this through with your professional advisor about your individual circumstances but also to have this conversation now.
