The last year has made us all aware of how we’re damaging our environment and yet also, how the small changes that individuals and businesses make can have a real impact. Change can only come from action and here’s what you can do as a business.
Your biggest opportunity right now is to adopt a green fleet policy. Not only does it make good business sense but it could save a significant amount of money for your fleet. Keep reading even if a green fleet is not right for your business at the moment as there are other benefits you can implement.
Cars are one of the most popular employee benefits. Your organisation could make a significant improvement to the environment, your budget, and the health of your employees, as well as reducing your grey fleet risk, by helping your employees’ transition to electric by introducing a salary sacrifice for cars scheme now.
The latest figures from the Society of Motor Manufacturers and Traders (SMMT) below show that the sale of plug-in electric cars rose by over 300% in 2020 compared to 2019.
|Fuel Type||2020||2019||Change||Market share 2019||Market share 2020|
The government has already announced that until 2024 the maximum BiK percentage for pure electric cars will be just 2%, which means there are considerable savings available for EV drivers. And for employees that are not eligible for a company car you could set up a salary sacrifice scheme; employees would get a brand new car at corporate prices, and employees should save a significant amount of income tax and NIC, and you’ll save NIC, on the salary sacrificed.
And of course, zero emission cars are exempt from Vehicle Excise Duty, commonly known as road tax.
In July 2020, the UK Electric Fleets Coalition, run by the non-profit organisation the Climate Group, in partnership with founding member, BT Group, successfully called on the government to bring forward the 100% EV sales target to 2030. As part of the Climate Group’s EV100 initiative, of which Tusker is a founding member, 100 organisations have already committed to switching more than 4½ million vehicles to zero emission and to install EV charging units at over 3,000 business locations, by this deadline.
To encourage other fleets to commit to its green agenda and to ensure this target is met, the UK government has provided incentives to purchasers of qualifying ultra low emission cars in the form of the Plug-in grant, and is encouraging fleets to adopt pure EVs by reducing the Benefit in Kind (BiK) tax to zero in 2020/21 and announcing that it will not rise above 2% until 2025/26 at the earliest. A 100% first year allowance has also been made available on the purchase of charging equipment, and grants are available on the installation of both home and workplace charging units.
Fleet operators know already that they must transition to electric, which for some will be a huge endeavour, so many are starting now. Although the government has committed to doing all it can to help businesses to transition, forward thinking organisations have already done their homework and know that:
- Although list prices may be higher, the plug-in car grant for lower cost vehicles is reflected in rentals.
- The whole life costs of leasing ultra low emission and pure EVs are usually less than their ICE counterparts because Class 1A NIC is lower and
- …the running costs, including maintenance and fuel is also lower.
- Employees charging their cars at work for free is not considered a benefit and therefore incurs no BiK tax or Class 1A NIC, even if they’re charging their own cars.
- Most commutes can easily be accommodated by an EV and the electric range of most PHEV’s, saving significant amounts of money and greatly reducing pollution.
There are now over 35,000 public charge points in the UK, so if an employee has to re-charge on a business journey, they should easily find a charge point.
Plug-in cars - the dawn of a new age
Many fleet managers may be having sleepless nights at the prospect of going electric because there are many common misconceptions about plug-in cars, including:
- They’re expensive.
- They don’t have the range needed for business journeys.
- Some employees don’t have off road parking, so can’t all charge at home.
- There aren’t enough public charging points.
But, since the Nissan Leaf, the first mass produced electric car available in the UK, hit our roads in 2011, huge strides have been made in all things electric car related.
Let’s challenge these misconceptions, last to first.
With more than 35,000 public charge points already in place, and government funding of £500 million to support the rapid roll out of more units, the infrastructure should be in place to cater for the number of projected electric cars much earlier than 2030.
Residential roadside parking
The government’s On-street Residential Chargepoint Scheme, run by the Energy Saving Trust, has been awarding grants over the last couple of years to enable UK local councils to start the implementation of roadside charging in areas where off road parking is not possible. To date, 71 councils have been awarded the grant and started implementation.
First generation electric cars have been used successfully by UK businesses for years - if your business operates locally, a taxi firm or estate agency for instance, then range isn’t a problem, especially if your drivers can recharge at work between trips.
If you need a longer reach, there are over 35 pure electric cars being launched in 2021 which offer ranges over 300 miles on one charge so most journeys will be able to be made on one charge. Alternatively, a plug-in hybrid might be the right choice for you.
Cost - Whole Life Costs (WLC)
We’ve looked at a variety of pure electric cars and compared them with their petrol or hybrid counterparts to show the monthly savings* that could be achieved.
|Model||List Price||Average WLC||Average BiK tax|
|Nissan Leaf 110kW Tekna 40kWh||£32,790||£370||£11|
|Nissan Micra 1.0 DIG-T 117 Tekna 5dr [Vision+ Pack]||£20,575||£405||£206|
|Audi e-tron 300kW 55 Quattro 95kWh Launch Ed [C+S]||£87,295||£880||£29|
|Audi A5 TFSI 265 Quattro Edition 1 5dr S Tronic [C+S]||£53,050||£912||£654|
|Vauxhall Corsa 100kW Elite Nav Premium 50kWh [11kWCh]||£33,840||£314||£11|
|Vauxhall Corsa 1.2 Turbo Elite Nav Premium||£22,975||£388||£230|
|Mini 135kW Cooper S 3 33kWh||£34,045||£465||£11|
|Mini 135kW Cooper S 3 33kWh||£31,065||£567||£362|
*Based on a 3 year, maintained contract including motor insurance, 10,000 mile per annum, of which 5,000 are business miles, starting in April 2020, for a 40% taxpayer.
Cost - Charging
The government expects 80% of charging to be carried out at home, and according to leading charge point installer Pod Point, for a typical electric car with a 60kWh battery a 100 mile range charge at home costs about £4.20, and overnight charging for a plug-in car could cost as little as just £1.95.
This compares favourably to a re-fuel cost between £10 and £13 for a petrol or diesel car.
Another option your business has is to offer your employees a car allowance instead. There’s no fleet management because the cash allowance is added to your employees’ salary, enabling them to buy or lease their own vehicle and potentially still save money.
This puts the onus of finance, running costs and admin onto the employee, but is still a tangible benefit and one that reflects well on your business.
Interested in exploring the benefits of car salary sacrifice schemes, green fleets and car allowances to find what’s right for your business? Give us a call on 0333 400 1010.