Why electric car leasing could be perfect for your Civil Engineering Company

Civil Engineering Companies- Why electric car leasing could be perfect for you

The Labour Government is now in and heading our automotive strategy for the future. With EVs, this is somewhat of a big undertaking, with many car manufacturers, trade bodies and finance companies now raising some serious concerns on how the UK is progressing towards the 2030 ZEV Mandate target.

Only yesterday (25 July 2024), the BBC  reported on comments from the SMMT which has been pushing for more governmental support to help customers go electric. In particular three main incentives could assist including:

•  Cutting VAT on EVs sold in the UK for at least 3 years;
•  Exempt all EVs from the expensive car supplement for VED / road tax; and
•  Bring price parity for public charging (which is still considerably more expensive than home charging).

With the article identifying a drop in electric vehicle production, and a noticeable steadying of sales, it does seem that there is credence to the arguments from many of the leading protagonists. But what is quite important to distinguish, is the incentives for businesses v incentives for personal / retail customers in the electric car world.

Tax Benefits for Civil Engineering Companies Leasing an Electric Car

As we will discuss in the context of civil engineering companies moving their fleets electric, there are some immensely beneficial tax reasons for both employer and the employee. However, for personal customers looking for a new or used EV, whether cash / hire purchase / PCP / lease, there are some obvious limitations.

More needs to be done to enable the private sector to move into zero-emission technology more seamlessly. In addition to the above, this could include better information and selling standards, cheaper motor insurance and even charging incentives If we can make a financial argument for electric, then more of the British public will join the movement.

But for many businesses, like civil engineers, the reasons for moving into electric are not in short supply. While we appreciate that many involved in the groundworks and construction sector purchase their vehicles, this is often down to the fact they use commercial vehicles / vans, which are subjected to heavy use and damage.

Management teams, engineers and non-frontline vehicles are not always more suitably procured by purchase-style products like hire purchase or contract purchase, when it comes to the world of BEV.

While a limited company can offset (or write-down) 100% of the vehicle cost with an EV, because of the 0g/km of Co2 it emits, this is not always giving a robust and detailed overview. In particular, with many ownership products committing the company to that vehicle.

If the residual value position is not wholly positive, the company may risk significant deprecation. With more EVs being launched, in addition to changing technology, how beneficial is it to keep your senior team and consultants in vehicles beyond a 2 / 3 / 4 year period?

For contract hire, or leasing, the EV is registered and owned by the leasing company, so they undertake all of the ownership risks. Not only that, the finance companies we work alongside will offer funder-maintenance packages, which ensure that the cost of all servicing, maintenance, tyres and breakdown are included for the duration of the contract.

Not only is VAT recoverable on this aspect of the monthly rental but this effectively allows an organisation to outsource their fleet management into more cost-effective solutions. As we recently discussed in our maintenance blog there are a number of considerations when it comes to maintaining your vehicle. For high-mileage business customers, this becomes an even more relevant consideration.

With contract hire your civils business does enjoy some practical financial benefits. The monthly rental you make each month is completely allowable against Corporation Tax (as the vehicle emits 0g/km).

Any of the charge point infrastructures you install at the company premises are completely allowable against Corporation Tax too, as these fall under full expensing. For VAT-registered companies, up to 50% on the finance can be reclaimed. For your employees there are further benefits, with electricity not being considered a fuel, there are no private fuel charges applied for any charging sessions which the company covers.

Perhaps more crucially, the employee enjoys a very beneficial company car position. For combustion options, the petrol / diesel situation did lead to some punitive tax treatment for drivers, with HMRC making it clear that more polluting models will be treated to a far more expensive experience.

Because EVs emit zero tailpipe emissions, they are classed as 0g/km on CO2. For 2024/25 this means a 2% BiK (Benefit in Kind) position. To calculate your company car tax, you simply take the vehicle’s value (known as a P11d), your income tax threshold (20, 40 or 45%) and the BiK rate.

In short, the more expensive and polluting your vehicle is, the more tax you will pay in accordance with your BiK rate. Since EVs only attract the 2% this results in some nominal tax for the employee even where the driver is a 40% tax payer and the vehicle exceeds £40,000 in value. Many UK drivers are enjoying tax bills of £25 - £75 per month instead of the £400 - £600 they previously incurred with combustion.

But don’t just take our word for it. For FDs and management in civil engineering companies, just head to our amazing electric car leasing website to find out more on how you can improve your green fleet.  

How about the new Audi Q6 electric SUV which is coming to the UK for 2024?

This all-electric option is built on the new VW PPE platform and includes:

•  Sport - (from £64,200) this includes 19” alloys, progressive steering, comfort suspension, LED headlights, high beam assist, headlight cleaning system, exterior mirrors with electrically folding and heating functions, twin leather front seats, 4-way electric lumbar support, heated front seats, 3-zone climate, ambient lighting, 14.5” OLED touchscreen and 11.9” display, Audi sound system, wireless charging, hill hold assist, top-view camera, park assist plus, lane departure warning, adaptive cruise; and

•  S Line - (from £67,200)  this adds 20” alloys, S Line bumpers, privacy glass, S Line exterior styling, front sport seats, black headlining, stainless steel pedals, heated 3-spoke steering wheel; and
• Edition 1 - (from £72,2000 this adds 21” alloys, matrix LED headlights, active digital light signatures, black styling package plus, red brake callipers, front sports seats in Dinamica, pneumatically adjustable lumbar support with massage for the seats, inlays in anthracite high-tech mesh, MMI 10.9” front passenger display, lane departure warning, e-tron sports sound and proactive protection system.  

In terms of colours choose from Plasma Blue, Acari Blue, Magnet Grey, Manhattan Grey, Glacier White and Soner Red. Add the Sound and Vision Pack (for £3,195) to include - augmented HUD, Bang & Olufsen sound system and ambient lighting package plus. You can also choose a folding towbar (for £1,050) and a front luggage compartment (called a “frunk”).

And how does the new Audi Q6 EV perform?

This AWD SUV will have a 94.9 kWh usable battery which will offer 0 – 62 times of 5.9 seconds, 130 mph top speeds and 285kW (or 382hp). Expect a combined winter range of 240 miles with warmer weather allowing for 320 miles – a 285 mile combined.

On charging, the 11 kW AC max will allow 10 hour and 15 min 0 – 100% charging times with the 270 kW DC maximum allowing 21 minute 10 – 80% times. A cargo volume of 526L is available with this car. It has a vehicle fuel equivalent of 122 mpg. You can tow with this EV – 750kg (Unbraked) and 2400kg (Braked). It also has no V2L or V2G capabilities (so far). The Heat Pump is standard.

In terms of the car shown, the Audi Q6 E-tron Estate Special Editions  285kW Quattro 100kWh Edition 1 5dr Auto [Sound+Vision], this is based on the following configuration:

•  Asari Blue Metallic Paint;
•  Dinamica microfiber/leather - Black with steel grey diamond stitching; and
•  21"" x 9.0J 10.0J 5 Y-spoke dynamic style metallic black gloss turned finish. 

Need more help or advice on taking your Civil Engineering company electric?

Just get in touch with our team on 01942 910 001 or by emailing us at [email protected]

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