Looking to purchase a new vehicle – considering electric?
Electric Cars – Grants and Tax Savings
If you are looking to purchase a new vehicle and are considering going electric, the government are offering a grant of up to £2,500 giving an automatic discount against the cost of the vehicle.
Who is eligible for the grant?
If you are purchasing a brand new, low-emission vehicle which has been approved by the government and the cost does not exceed £35,000, you may be eligible for the grant. The grant, which has been available from 18 March 2021, is one of the Government’s measures to encourage people to switch to electric vehicles in the drive to reduce carbon emissions.
How much can I claim?
The grant will pay for 35% of the purchase price of the vehicle, up to a maximum of £2,500. To be eligible, the cost of the vehicle cannot exceed £35,000.
How do I claim the grant and how long do I have to claim it?
You do not need to do anything if you are buying one of these vehicles – the dealer will include the value of the grant in the vehicle’s price. Whilst we do not know exactly how long the grant will be available, the Government has confirmed that funding for plug-in vehicles will last until 2022 or 2023.
What benefits can be gained if the vehicle is a company vehicle?
If the vehicle is being purchased for use in your business, it could be eligible for 100% First Year Allowances (Capital Allowances) meaning the value can be deducted from your profits before you pay tax.
A qualifying investment could also be eligible for the super-deduction which offers 130% first-year relief. This relief is available until 31 March 2023.
Benefit-in-kind rates for electric vehicles are also low with a rate of 1% for 2021/22, rising to 2% in 2022/2023.
Is there anything else I should know?
The grants for electric cars also extend to employers installing charging points at work for their employees, up to a maximum of £14,000. There is also a £350 grant for individuals installing a charging point at their home.
Whether you are replacing an existing electric vehicle or are considering purchasing one for the first time, now is an opportune time to make the most of the Government’s incentives and reliefs. Given the increase in popularity of electric vehicles, it is expected that the Government will look to reduce these incentives and reliefs in coming years as the number of people purchasing electric vehicles continues to increase, therefore it is worth making the most of these incentives and reliefs now whilst they are still available.
Read about Company Car Changes here