Moving your Accountancy Practice to an Electric Car in 2024

Why your accountancy practice should be leasing an electric car in 2024

Many accountants will be busily advising their clients about running their companies as tax effectively as possible, including the procurement methods for their new cars and vans. And with a changing culture and attitude towards electrification  - politically, socially and economically - since 2018 / 2019, the pursuit of battery technology for business vehicles will not have been missed by the UK’s accountants (or their customers).

But those accountants, with a limited company, will also be taking advantage of the tax advantageous position which EVs allow and why not? But it isn’t just pure numbers and statistics which make BEV options so good; many modern options are aesthetically impressive, they drive incredibly well (and fast!) plus there are some important running-cost savings compared to equivalent combustion cars.

And getting on board with this will become even more of a cultural, and legal, requirement with significant Governmental changes for 2024. Starting this year, every manufacturer must ensure that at least 22% of their registered new cars are Zero-Emission. In failing to do so, there are purported fines of around £15,000 for every non-compliant car. In looking at the interesting statistics from 2023 it is fairly clear that many manufacturers have to dramatically change their product demographics. And this will hopefully mean some amazing electric car leasing deals in 2024!

Which manufacturers are ZEV compliant in 2023 (and beyond) 

Why leasing an EV (like the Audi Q8 e-tron) through your Limited Company makes sense for many businesses

Many accountants will already be attune to the many fiscal benefits associated with an EV and contract hire. Indeed, there are some great articles available online,  which explore HMRC, tax and employer v employee costs. When you speak to a credit broker, like e-car lease, it’s key to note that we are not financial advisors or tax experts.

While we can offer some information pertaining to HMRC, and links to resources, our aim is to ensure that the finance product is robustly understood - whether this be contract hire, contract purchase, lease purchase or personal contract purchase - and ensure that the car (or van) is correctly understood in its all-electric format.

Our website contains a plethora of resources on range, charging times, charging speeds, charging costs, P11d, company car tax and running costs - all of which is contained in our Electric Vehicle Certificate (EVC™) which accompanies each quotation. Driving a vehicle which meets your needs and requirements is of the utmost importance to us.

But in covering some of the key financial aspects, perhaps this might prove to be a subtle reminder to some accountants who are not themselves benefitting from the zero-emission driving. As of 1 April 2023, the rate of Corporation Tax adjusted from 19 to 25%, which has certainly focused many business owners on sage financial accounting.

In running a car via your limited company, if you use contract hire (as an operating lease), this will allow you to offset 100% of the rentals against Corporation Tax so long as the vehicle emits less than 51g/km of CO2. If you are VAT registered, you can reclaim up to 50% of the VAT on the finance element of the car BUT this is also subject to the car emitting less than 51g/km.

For any maintenance and servicing elements, you are eligible to reclaim 100% of the VAT on this aspect. In contrast, should you look at purchase style automotive finance products like hire purchase or contract purchase, please note that you claim Capital Allowances. For a zero-emission option, you are entitled to write down 100% of the cost against Corporation Tax in year 1 (and only 18% for a vehicle emitting between 1 - 50g/km of CO2).

Investing into your commercial, or residential premises with charge point infrastructure is also tax efficient. So long as you utilise qualifying plant and machinery for full expensing, which charge points for electric vehicles are, you can reclaim 100% of the purchase in year one.

And in further good news, electricity is not considered a fuel for car fuel benefit, so charging your EV via your company will not incur any personal income tax exposure unlike a petrol or diesel vehicle. Plus Vehicle Excise Duty, or road tax, is still beneficial in that there is zero-cost. Nor will an EV incur the Expensive Vehicle Supplement of £390 until after 31 March 2025. Based on competitive discounts and these additional savings, it’s clear to see why rentals in the leasing market are becoming so competitive for all-electric options.

For directors of the accountancy firm, as an employee they will also be conscious of their personal tax / income tax exposure. Using a car via your company does incur tax, which is why so many employees will utilise a cash-for-car allowance or lease a commercial vehicle. However, the main theme of company car tax is emissions - the higher this is, the higher the level of tax you will incur.

For battery vehicles, the zero-emission from tailpipes means that just 2% BiK (Benefit in Kind) applies until tax year 2025/2026. What this translates to is a company car tax bill of circa £10 - £50 per month on most vehicles as opposed to the hundreds of pounds which combustion vehicles offer. For many business owners, this means that performance and luxury cars in an electric format are significantly more cost-effective than combustion options. And there is no shortage of amazing cars like the  Lotus Eletre     Porsche Taycan , Audi Q8 e-tron  or the upcoming Range Rover EV. Many of these outperform their petrol or diesel equivalent, so there is no compromise.

Add to the mix the Whole of Life Cost savings which many electric cars offer your accountancy firm, and the pros quickly outweigh the cons. Many EVs need only one service after 2 years, with some like Tesla needing very little at all. And with less moving parts, the actual servicing costs are reduced with most dealerships.

When you factor in the competitive overnight electricity tariffs from the likes of OVO, E.ON and Octopus, you can quickly ascertain that the EV can be cheaper to run compared to combustion (mileage and circumstances dependent). With upcoming Clean Air Zones and Congestion Zones being implemented through the UK, you may see additional financial necessity brought about by emission-based charging.

For any further information on taking your accountancy green, or if you are looking to partner with us, just get in touch via [email protected]  

In terms of the car shown, the Audi Q8 E-TRON ESTATE 300kW 55 Quattro 114kWh Black Edition 5dr Auto, this is based on the following configuration:

• Chronos Grey Metallic Paint
•  Valcona leather - Black with rock grey contrast stitching, carpet, dashboard + front sport seats with s embosses logo
•  21" x 9.5J 5 arm aero glossy black Audi sport alloy wheels
•  6m Type 2 mode 3 charging cable 

Available from just over £75,000  the AWD SUV will have a 106 kWh usable battery which will offer 0 – 62 times of 5.6 seconds, 124 mph top speeds and 300 kW (or 402 hp). Expect a combined winter range of 265 miles with warmer weather allowing for 355 miles.

On charging, the 22 kW AC max will allow 5 hour and 45 min 0 – 100% charging times with the 168 kW DC maximum allowing 33 minute 10 – 80% times. A cargo volume of 569L is available with this car. It has a vehicle fuel equivalent of 120 mpg. This option can tow 1800kg (braked) and 750kg (unbraked). This EV will have no Bidirectional charging.