Electric Car Guide

Electric Car Guide

Thinking of buying an electric car? Here are the financial incentives for electric vehicles that you need to know about, including the Plug-in Car Grant, tax incentives and running costs.

Introduction

There are currently only a few electric vehicles (EVs) to buy today but this will change soon, as many manufacturers are planning to bring new electric vehicles to the marketplace.

Electric vehicles do not produce any ‘tailpipe’ emissions. If they are recharged using electricity from renewable sources, they are potentially the lowest emission vehicles you could use.

Problems associated with electric cars include their limited range and the need to regularly recharge them. However, they are ideal for short journeys in urban environments, where the number of recharging facilities is also expanding.

Electric cars with the latest technology can be expensive to buy, but their running costs are very low, and they can benefit from incentives such as congestion charge exemption and zero company car tax.

Plug-in Car Grant

Motorists purchasing a qualifying ultra-low emission car can receive a grant of 25 per cent towards the cost of the vehicle, up to a maximum of £5,000. The 2010 Spending Review confirmed that government has made provision to support the Plug-in Car Grant for the life of this Parliament.

The government is adopting a ‘technology neutral’ approach to reducing emissions from transport. This means that cars with tailpipe emissions of 75 g/km or less, including electric, plug-in hybrid and hydrogen-fuelled cars are all potentially eligible for the subsidy. However, consumers will find that hydrogen-vehicles are, as yet, less available on the open market than electric and plug-in hybrid options.

To ensure continued value for money for the taxpayer, the scheme, and the level of subsidy provided, will be regularly reviewed. The first review of the Plug-In Car Grant will take place in early 2012.

The Plug-In Car Grant has been designed to help make the whole-life costs of a qualifying car more comparable with petrol or diesel equivalents. Over time, as manufacturers begin to make these cars in greater volumes, the costs of production should begin to fall. This will help to make an ultra-low carbon car a realistic option for anyone looking to buy a car.

Both private consumers and businesses can benefit from the Plug-In Car Grant when purchasing a qualifying ultra-low emission car and registering it in the UK.

The cars eligible for the Plug-in Car Grant are:

Chevrolet Volt (on sale early 2012) (Vauxhall Ampera with Chevrolet badge)

Renault Fluence ZE (on sale 2012)

Smart for two electric drive

Tata Vista (on sale 2012)

Toyota Prius Plug-in Hybrid (on sale early 2012)

Vauxhall Ampera (on sale early 2012)

Note that the grant currently doesn’t cover vans.

As of 30 September 2011, 786 claims had been made through the Plug-In Car Grant scheme, with Society of Motor Manufacturers and Traders (SMMT) data showing that 910 cars eligible for the Grant were registered over the same period.

Tax incentives

Alistair Darling announced in 2010's Pre-Budget Report that electric cars would be exempt from company car tax from April 2010 for five years. This means that company car drivers will pay 0% benefit-in-kind tax if they buy an electric car.

Electric vans also benefit from van benefit charge exemption over the same period, plus the introduction of a 100% first-year allowance for companies purchasing electric vans, enabling them to offset the cost of buying an electric van against their corporation tax bill in year one.

Running costs

It’s estimated that it would cost an electric car such as a Nissan LEAF around £1.50 for a charge sufficient to cover 100 miles (dependent upon electric tariff). A car that averages 50 mpg would cost in excess of £10.00 to cover this distance, so the LEAF is likely to be around five times cheaper in terms of fuel running costs than an average petrol or diesel car. Electric cars also require less maintenance as there are so few mechanical parts.

This is in addition to an electric car enjoying zero Benefit in Kind Personal Tax and zero Benefit in Kind Personal Fuel Tax (compared to £166 per month for a Ford Focus 1.6-litre diesel hatchback).

Electric cars are also exempt from the London Congestion Charge, and are free to park in certain areas of London.

Paul Clarke

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