The EVolution of Electric Vehicles || Tax Benefits in the UK
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Abstract
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Cost-effective commuting in central London – Electric vehicles enjoy exemptions from both London’s congestion charge and ULEZ charge, resulting in daily savings of £27.50.
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Road Tax exemption – Fully electric vehicles are not subject to Road Tax, providing additional financial relief.
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Favorable Benefit in Kind (BiK) rate – With rates as low as 1% for the 2021/2022 financial year and 2% for the 2022/2023 financial year, electric vehicles offer attractive tax benefits.
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Incentive for New Low Emission Cars – Eligible for a grant of up to £2,500, provided the car is new, approved, and costs less than £35,000.
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Grants for Purpose-Built Low Emission Taxis – Taxis such as Dynamo and LEVC can receive grants of up to £7,500 for meeting low emission criteria.
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Environmental Criteria for Grants – To be eligible, cars and taxis must have CO2 emissions below 50g/km and a minimum emission-free range of 70 miles.
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Grant for Small Vans – Eligible for 35% of the purchase price, up to £3,000, for small vans with a gross vehicle weight (GVW) of less than 2.5 Tonnes.
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Grant for Large Vans – Eligible for 35% of the purchase price, up to £6,000, for large vans with a gross vehicle weight (GVW) between 2.5 and 3.5 Tonnes.
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Criteria for Eligible Vans – Vans with CO2 emissions below 50g/km qualify for these grants.
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Range Requirement for Eligible Vans: Vans must be able to travel at least 96km (60 miles) emission–free to be eligible for the grants.
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Grant for Small Trucks – Eligible for a 20% grant, up to £16,000, for small trucks with a gross vehicle weight (GVW) between 3.5 and 12 Tonnes (N2). Limited to the first 250 orders per fiscal year, with a cap of 10 per customer.
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Grant for Large Trucks – Eligible for a 20% grant, up to £25,000, for large trucks with a gross vehicle weight (GVW) exceeding 12 Tonnes (N3). Limited to the first 100 orders per fiscal year, with a cap of 5 per customer.
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Range Requirement for Trucks: Eligible trucks must be able to travel at least 60 miles without emitting pollutants.
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Rapid Capital Allowances – Enjoy a 100% allowance against corporation tax when purchasing a vehicle outright, applicable in the year of purchase.
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Comprehensive Expense Coverage – Vehicle running expenses, including electric charges, insurance, and repairs, are considered allowable company expenses.
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Tax Efficiency – Opt for purchasing the car using pre-taxed income, providing a more tax-efficient approach compared to post-taxed income.
Shubham Neupane
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