Is the Polestar 2 fastback perfect for your business?

The Polestar 2 Long Range - the perfect electric car lease for the business?

The last 2 - 3 years has brought about a tremendous evolution within the company car market for pure electric vehicle choices. While the leading manufacturer, Tesla, were a catalyst to this with their 2019 Model 3 Saloon, more automotive brands have followed in kind with their own options and derivatives.

And Elon Musk / Tesla do deserve recognition for what they did in the UK’s fleet and salary sacrifice market by providing a genuinely affordable and usable vehicle; 250 - 300 mile range, 25 - 30 minute rapid charging times and 3 - 5 second 0 - 62 times have made this the litmus test for what constitutes a good or a bad car. Are electric cars worth it? Well if they can mirror what Tesla has done, then the answer is almost overwhelmingly yes.

But in setting a standard for zero-emission standards, Tesla motivated others to follow. One of the leading alternatives to the Model 3 is the Geely / Volvo produced Polestar 2 fastback which landed for order in the UK during 2021. And unlike some manufacturers with early attempts to electrify their fleet, the Polestar team really succeeded with this innovation.

While any consumer / personal customer can lease an EV, it really has bene the company and fleet market “fuelling the growth”. Are electrics cars 100% tax deductible- is that why? The taxation position for both the company and the end user / driver are influential within the BEV debate. For a company leasing the car, either on a company car or a salary sacrifice scheme, there are corporation tax benefits.

What are the advantages of leasing an EV through the business?

While any consumer / personal customer can lease an EV, it really has been the company and fleet market “fuelling the growth”. Are electrics cars 100% tax deductible- is that why? The taxation position for both the company and the end user / driver are influential within the BEV debate. For a company leasing the car, either on a company car or a salary sacrifice scheme, there are corporation tax benefits. For any vehicle which emits no more than 50g/km for CO2, 100% of the monthly rentals are allowable against tax.

This means that for any businesses using EVs, which emit 0 g/km of C02, the initial rental and monthly rentals are all offset against the profits a business makes. In contrast, for any business purchasing a vehicle they may wish to utilise the 100% allowance, which allows the whole amount to be used against corporation tax. The 130% super-deduction capital allowance only applies to plant and machinery as per HMRC Whether you should lease or buy an electric car is a question of cash flow, accounting principles and the needs / requirements of the fleet. There are advantages and disadvantages to leasing and buying EVs, so always ensure you conduct a proper analysis with your broker / finance company / accountant before making a decision.

But what about VAT - can you reclaim that on an EV?

For any Vat registered business (i.e. for any business which has a turnover of £85,000 or higher)) there is an ability to reclaim VAT. However, do note that cars and vans are treated a little different. For a car, electric or otherwise, a company can claim up to 50% of the VAT on the basic rental (the finance aspect) and up to 100% on any maintenance or repair. With a car, unless this is a pool vehicle, you cannot reclaim all of the VAT. For vans, or LCVs, you can claim 100% of the VAT on the finance and maintenance, as this is treated as plant and machinery.

While that all helps the business - why does a company car driver benefit? Using a company car is not “free” just to dispel that myth. When you use a vehicle under a company car scheme or salary sacrifice scheme, your HR and payroll team must apply the relevant taxation principles to your monthly salary.

For any car registered on or after 6 April 2020, HMRC need to know the P11d of the car, the CO2 emissions and your individual tax position. To assist our business users, the “living with your …” tools does include a company car tax calculator which can be used in conjunction with our instant quote generator. For reference, the P11d is the list price of vehicle (including VAT) and any options or delivery charges. It doesn’t include the first registration fee or road tax / VED. Please note that electric vehicles (0 g/km) incur £0 vehicle excise duty and do not pay any rates from second tax payments or the £40,000 surcharge payments - so EVs currently get free road tax.

A P11d is not the actual price you pay, or the OTR, as it doesn’t take into account any discounts or offers you receive. The CO2 is effectively the level of emissions from your tailpipe which on any pure battery electric vehicle is 0g/km. Because of this position, company car drivers will pay 2% BiK (Benefit in Kind) until tax year 2024 - 2025. The end result is that an electric car is far cheaper than a combustion option for the driver on their tax computations.

There are clear financial reasons for leasing an EV; that is unequivocal. But there are some other key facets to take into account as part of any analysis. We call this the Whole of Life Costs. For example, there are other running costs associated with any vehicle including fuel, servicing, tyres, insurance and other maintenance which needs to be included. The finance element is just one part of this calculation.

To help demonstrate this more clearly to a fleet manager or FD, our e-car website will show the cost of charging (on 28p/kWh) to help this comparison against petrol or diesel. When you combine this figure against the real range (rather than WLTP) then you can achieve a cost per mile. When you include insurance and maintenance costs, there is a true cost to the EV operation. What evidence is showing is that the cost of charging via electricity is better than petrol /diesel amongst an ongoing fuel crisis.

Even with electricity rates increasing in domestic households, the cost of fuel is much better and with some EVs now having incredible energy efficiency, so customers can be assured of the value. And with less moving parts, electric cars not only need less servicing but the intervals are further apart compared to a combustion option. The lower running costs do help offset the high purchasing / leasing costs. For insurance, it does seem that customers are incurring higher premiums from many insurance companies.

However, with there now being some EV specialist insurers - LV, Direct Line and Admiral - we recommend that you do speak with them too. There are additional options like charge point insurance and roadside recovery which need additional thoughts.

Ready to go electric with your business on a Polestar?

For any customer wanting a more European feel to their EV, then consider this fastback. What’s great about this Volvo offshoot is that there are a multitude of battery and specification options (much more than the standard Tesla). Utilise a standard single range motor, the long range single motor or a long range dual motor (according to speed and range requirements).

And where customers really benefit is from the array of “packs” which can be included with this BEV. For example a Pilot Lite (LED lights, 360 degree camera, adaptive cruise control, automatically dimmer exterior mirrors and park assist), Plus (fixed panoramic roof, Harmon Kardon, heated rear seats, wireless smartphone charging and fully electric seats) or the Performance (increased power, 20” alloys, gold Brembo brake calipers, drilled ventilated discs and a dynamic chassis) can be added.

Other features like mats, charging cables, Towbars and preventative safety can be added at the factory or dealership. With automotive media like Top Gear rating this 8/10, Auto Express at 4/5 and CarWow at 8/10, it’s fair to say you won’t be disappointed with this all-electric fastback.

Polestar 2 Fastback 170kW 78kWh Long Range SM [pilot] 5dr Auto (Pure Electric Vehicle)

In terms of the car shown, the Polestar 2 Fastback 170kW 78kWh Long Range SM [pilot] 5dr Auto (Pure Electric Vehicle), this is based on the following configuration: