We are often asked by clients whether to switch to electric cars.
So, what are the tax incentives available for zero, or low-emission vehicles?
Salary sacrifice
It is possible to lease an electric car through a salary sacrifice scheme and this can be a good option for clients who are either higher or additional rate taxpayers. The sacrifice element is deducted from gross income before tax and national insurance are deducted, rather than paying for a lease from net income. This can reduce the final income tax rate for clients who are at the lower end of a higher rate band if the salary sacrifice reduces their taxable income into a lower rate bracket. The employer rents an electric car from a supplier and the employee is given the opportunity to rent it from their employer in exchange for part of their salary.
Electric vans
Investing in an electric van can be highly tax efficient for clients, especially if it may also be required for private use. From April 2021, there are no tax implications for using a company owned zero-emission van outside of business hours. These vehicles can also be purchased through salary sacrifice schemes.
Vehicle road tax
A further incentive to investing in an e-vehicle is the road tax payable. The rates for all 100% electric vehicles are now
