Simply Business - Insurance for your business

Call Us0333 0146 683
Our opening hours
Knowledge centre

Electric cars and vans – should you get one for your business?

5-minute read

Electric cars and vans – should you get one for your business?
Conor Shilling

Conor Shilling

6 August 2021

Electric vehicles for business have been increasing in popularity in recent years due to their environmental benefits, lower running costs, and a range of government incentives.

Read on to find out more about the pros and cons of having an electric vehicle for your business, as well as a rundown on some of the best electric business cars and vans.

The pros and cons of electric cars and vans for business

Electric vehicles have many financial and environmental benefits for businesses. However, there are some cost and performance downsides that you’ll need to consider.

What are the advantages?

  • the running costs are much lower – charging an electric vehicle could cost you a fraction of what you’d usually be spending on fuel
  • there are clear environmental benefits – one electric car can save approximately 1.5 million grams of CO2, according to EDF Energy
  • there is a range of government incentives and tax benefits available for business owners who have electric vans and vehicles

What are the disadvantages?

  • most electric vans won’t be able to travel as far as diesel or petrol vehicles without needing to be charged
  • it’s likely you’ll need to install a charging point at home or at work, which is an extra cost to consider
  • the initial cost of buying an electric car or van for your business is likely to be higher than buying a petrol or diesel vehicle

Can businesses get grants for electric cars and vans?

If you buy an electric vehicle for work, you can benefit from the government’s low-emission vehicles plug-in grant.

The grant covers cars, vans, mopeds, motorcycles, trucks, and taxis. It’s available to dealerships and manufacturers who’ll take the value of the grant off the price when you buy an electric vehicle.

The maximum grant for cars is £2,500, while the grant will pay a maximum of £3,000 for small vans, £6,000 for large vans, and £16,000 for trucks.

Travel incentives for electric vehicle owners

If you have to travel into urban areas for work, there is a range of benefits to having an electric van or car:

  • in London, electric vehicle owners don’t have to pay the congestion charge, saving £11.50 a day (which could add up to around £200 a month)
  • you’ll also be exempt from paying £12.50 a day as part of the ultra low emission zone (ULEZ)
  • there are similar ULEZ schemes planned in Birmingham, Manchester, Bristol, Bath, and Oxford

Electric car charging points for business

One of the reasons some business owners are unsure whether to buy an electric van or car is due to the cost and availability of charging points.

In response to this, the government has introduced an Electric Vehicle Homecharge Scheme, which offers up to 75 per cent towards the cost of installing electric vehicle charge points at people’s homes.

There’s also the Workplace Charging Scheme, which offers vouchers towards the cost of buying and installing an electric vehicle charge point at a workplace. Electric vehicle charging points on a street

What are the tax benefits of having an electric vehicle for your business?

If you buy a vehicle for your employees to use as a company car, they’ll need to pay company car tax and you’ll need to pay National Insurance at 13.8 per cent.

The benefit in kind tax rate for employees with electric cars and vans used to be 16 per cent. However, it was reduced to zero per cent in April 2020, rising to one per cent in April 2021, and two per cent from April 2022 to April 2025.

This means it’s now a lot cheaper to have an electric company car. What’s more, the benefit in kind tax rate for higher emissions vehicles is over 30 per cent, meaning electric car drivers make a significant saving.

Electric vehicle owners are also exempt from the following:

  • vehicle excise duty
  • van benefit charge
  • fuel benefit charge
  • fuel duty

If you buy an electric business vehicle personally (rather than as a company car), you can claim 45p per mile as a business travel expense, despite the cost of an electric vehicle being an estimated 4p per mile.

The environmental impact of electric business vehicles

The movement encouraging more people to use electric cars has been driven by the government, which announced its plans to ban the sale of new petrol and diesel cars in the UK by 2030.

Research from Ofgem suggests that more than 6.5 million households have plans to buy an electric or plug-in hybrid vehicle. Meanwhile, the Department for Transport estimates that there are currently around 500,000 ultra-low-emissions vehicles on the road in Britain.

On top of the environmental benefits, there are plenty more reasons for business owners to go electric, such as the government’s clampdown on petrol and diesel vehicles, initiatives like ULEZ, and various tax incentives.

For customer-facing businesses operating in towns and cities, there’s a clear Corporate Social Responsibility (CSR) benefit in showing that you’re committed to reducing your carbon footprint.

And even if your business isn’t consumer-facing, such as a driver delivering manufactured goods, the amount of emissions saved across long journeys each year will likely be enough to make you consider the pros and cons of going electric.

Electric vehicle charging point sign

What are the best electric vans and cars for businesses?

If you’re thinking about getting an electric car or van for your business, there are lots of options to choose from. Here’s an overview of six popular electric vans and cars for small businesses.

Three of the best electric vans

Nissan eNV200

This van has a ‘real-world’ driving range of 100 miles before it needs charging, as well as a 40kWh battery pack. It’s recommended for business drivers who do low mileage in the city and could set you back £30,000+.

Volkswagen ABT eTransporter

Made by ABT and sold by Volkswagen, this van has an 82kW battery pack and a claimed range of 82 miles. It’s likely to cost more than £40,000 and is recommended for drivers who average 50 miles a day.

Mercedes-Benz eVito

​​This van allows drivers to slow or coast while driving, boasting a 93 mile range and 85kW motor. It’s known for its good storage and lack of fast charging, and will likely cost around £40,000 to buy new.

Three of the best electric cars

Nissan Leaf

This car has a range of 168 miles and takes up to 18 hours to fully charge. It’s known for its heated front seats and steering wheel and costs just under £30,000 new.

Renault Zoe

With a charging time of 20 hours, this car benefits from a range of 179 miles. It has a hill-start assist and electronic stability control, costing around £28,000 new.

Audi E-tron

Although it takes 42 hours to charge, this car boasts a range of 259 miles. It also offers a rear view camera and fast acceleration. To buy new, it’ll cost at least £60,000.

Should you buy or lease an electric vehicle for business?

There are good reasons to take either approach. An electric car business lease reduces the upfront cost and gives you a better chance of keeping up with technology developments such as increased time between charges.

On the other hand, there are lots of financial incentives for buying an electric business vehicle and the running costs after your initial outlay are likely to be very low.

Whatever you decide, it’s important to do your research and think about the long-term impact it could have on your business.

Are you considering buying an electric vehicle for your business? Let us know in the comments below.

Ready to set up your cover?

As one of the UK's biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?

Start your quote

We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

Find this article useful? Spread the word.

Share
Tweet
Post

People also liked

Landlords could be targeted in new Capital Gains Tax raid.

19 November 20202-minute read

Landlords could be targeted in new Capital Gains Tax raid

Landlords could be hit by another massive tax raid, as the Office of Tax Simplification outlines its recommendations for an overhaul of…

Read more

Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.

Subscribe to our newsletter

Categories

Popular articlesBusiness resources from FarillioGeneral businessGuestInsuranceLandlordLandlord resources from FarillioLegal and financeMarketingNewsOpinionProperty maintenanceTradesmanCovid-19 business support hub

Address

6th Floor99 Gresham StreetLondonEC2V 7NG

Sol House29 St Katherine's StreetNorthamptonNN1 2QZ

© Copyright 2021 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.