The BMW iX3 Electric SUV - the perfect EV for a Small Business?

Is the BMW iX3 Electric SUV the perfect EV for a Small Business?

Tax effective, environmentally cleaner and fun to drive - there are a number of great reasons for the UK’s businesses, small and large, to consider zero-emission options.

And this isn’t an agenda of boring or lifeless motoring options either; only last week we witnessed the Lamborghini Lanzador be officially announced as an upcoming part of their future EV ambitions. An innovative 2 + 2 Gran Turismo, this next generation tech will be available from around 2028 and it will include some amazing features like rear-wheel steering, air suspension, all-wheel drive plus the 800V architecture you receive in a Porsche for up to 350kW of rapid charging capability.

The Lamborghini engineers have been more subtle about the performance but some online articles and sources are suggesting around 1000 -1300hp and sub-3 second 0-62 times will be available. Following previous models like the Huracan, Aventador and the Urus, the all-electric Lambo certainly has big shoes to fill. But with over 5 years until it is launched, we have plenty of all-electric vehicles for business leasing customers to enjoy beforehand.

With confidence in lithium tech improving, the push by fleets away from combustion is certainly evident. With used EV sales increasing by nearly 82% in July 2023 and new EV registrations up nearly 88% from 2022, momentum is clearly building.

For many limited companies there are sensible financial and tax reasons for adopting this strategy, which company accountants and Finance Directors can quickly disseminate. With contract hire, 100% of the monthly rentals are allowable against your corporation tax, whereas those vehicles with 51g/km+ of CO2 are only able to offset 85% of the rentals (known as the lease rental restriction).

For VAT registered businesses, on EVs you can claim up to 50% of the VAT on your vehicles, unless it is solely used for business purposes and then you claim 100% of the Vat. With vehicles emitting with 51g/km+ of CO2, the same 85% restriction will apply in terms of VAT. For any service/maintenance elements, 100% of the VAT can be reclaimed regardless of the CO2 position.

For company car drivers (or salary sacrifice), whether you are a limited company or plc, there will be tax payable based on you enjoying the vehicle. With EVs being zero-emission from the tailpipe, or 0g/km, the Benefit-in-Kind (BiK) you are exposed to is relatively nominal.

For tax year 2023-24, this is only 2% which equates to company car tax exposure of around £15 - £50 per month for many 40% tax payers. Your car tax is calculated in accordance with the vehicle’s value (P11d), your income tax bracket (20, 40 and 45% generally) and the vehicle’s emission.

In short, the more expensive and more polluting your vehicle is, the higher the level of tax you will pay. Unless you are a company van driver, the rate of tax you pay on a combustion company car could be astronomical compared to the electric alternative. This is why the fleet and salary sacrifice market have been so key in achieving vehicle registrations. And for Vehicle Excise Duty rates (car tax) the 0g/km of Co2 means that there is no cost attributed to the vehicle.

The first year tax and subsequent costs will be £0 compared to some eye-watering value for more polluting cars. In addition, the expensive car surcharge of £355 - a list price of more than £40,000 - does not apply to electric vehicles until 1 April 2025. So for the driver AND the company, going electric is a financially sage process to undertake.

But can any business lease an EV?

The first query we will raise is what type of business are you - sole trader, partnership, limited company or an LLP. The reason for doing so is that there are legal / compliance based processes we need to tailor (regulated v unregulated) and the information our team will need from you depends on the business type.

For example, a sole trader / partnership is considered as a regulated transaction and the steps we now go through under the Consumer Duty regime are somewhat more regimented. With ST or Partnerships, the business proprietors are jointly and severally liable for the debts of the business, so if the vehicle is not paid for the finance company will liaise with the owner(s) in their personal capacity. In addition, for these businesses, our finance companies will require the financial information set out below:

All of the above can be found in your tax returns or with the information you process with your accountant. In addition, as there is no separate legal entity, the finance company will perform a credit application on the business proprietor(s). This means that if your credit is not robust, then you could be declined. Before making an application, you should use Experian to ascertain your credit history and profile if you have any concerns. To be clear, contract hire and leasing is a credit-based product and is not suitable if you have poor or adverse credit.

For a limited company, the availability of a deal will depend on the strength of their accounts and the credit profile of the directors. For most limited companies, a finance company will expect there to be at least one year’s accounts filed at Companies House, although some finance companies will need at least two.

As a credit broker, not a lender, we work with a select number of finance companies who essentially make a commission payment to us if you proceed. One of our main advantages is that we can place your company with a finance solution, and funder, which meets your needs and requirements.

Especially when it comes to credit and underwriting. With many EVs costing above £40,000, the level of due diligence is somewhat robust and the finance company need confidence that the company will satisfy these obligations. To bolster this, a personal guarantee, or director’s guarantee, may be requested by the finance company to support the application. This means that if the company fails to pay for the EV, then the director or directors nominated will be personally accountable for the debts.

While a limited company, with the veil of incorporation, does protect the directors (so long as no DG is required), this does not mean that they will not be considered as part of the application. When you complete the credit application with our e-car team, at least two directors must be nominated on the form and they will be subject to a soft credit search.

This means that the director will receive a search which does not leave a credit footprint, but which is still considered as part of ascertaining affordability and propensity to pay. If a director does have bad or adverse credit, this can result in the application being declined.

In addition, because financial rules and regulations are increasing, more and more finance companies are asking about Ultimate Beneficial Ownership. This means providing to e-car confirmation if: a) a listed director holds more than 25% of the shares in the company being proposed; or b) if there are any shareholders who hold more than 25% of the shares in the company being proposed (and are not directors).

The ultimate beneficial owner of the company must be identified to the finance company as part of their internal protocols. Any ultimate beneficial owners must supply their full name, date of birth and home address (whether a director or shareholder). This is a mandatory obligation being employed throughout the UK. Furthermore, the director who will be signing the documents may need to go through identity reviews or a Proof of Identity Review. A driving licence and proof of address dated in the last 90 days will be required.

In terms of UW and credit application tips for leasing an EV, we always suggest you speak to your company accountant initially, to ensure that everything is up to date. This means checking your latest accounts have been filed at Companies House and, if not, that draft accounts are available for review.

We also suggest having 3 months business bank statements and any management accounting information available for review should you have any concerns about the vehicle value and your company’s affordability. In addition, do not rush the credit application process. The information you provide to the e-car lease team is sent directly to the finance company and accuracy is of the utmost importance. If you do make errors or omissions, this can lead to credit declines and we may not be able to overturn this within a quick timescale.

And is the BMW iX3 the perfect electric SUV?

Throughout 2023, this has been one of the best value and most-popular deals our e-car team have been offering to BCH customers. The RWD has a 74 kWh usable battery which will offer 0 – 62 times of 6.8 seconds, 112 mph top speeds and 210 kW (or 282hp). Expect a combined winter range of 200 miles with warmer weather allowing for 270 miles.

On charging, the 11 kW AC max will allow 8 hour 0 – 100% charging times with the 155 kW DC maximum allowing 31-minute 10 – 80% times. A cargo volume of 510L is available with this car. It has a vehicle fuel equivalent of 131 mpg. You can tow 750 kg (unbraked) and 750 kg (braked). It also has no V2L or V2G capabilities.

By going for the PRO in the iX3, you benefit from 20” bicolour alloy wheels (890 M), Harman Kardon surround system, Parking Assistance Plus, acoustic glass and sun protection class.

In terms of the car shown, the BMW IX3-E ELECTRIC ESTATE 210kW M Sport Pro 80kWh 5dr Auto Pure Electric Vehicle, this is based on the following configuration:

•  Metallic Paint - Sophisto grey
• Vernasca leather - Black with blue contrast stitching
•  Aluminium rhombicle with pearl chrome interior trim
•  20" M aerodynamic alloy wheels in M bicolour style 890
•  Mode 2 flexible charger

Browse our BMW iX3 deals