Financial Benefits of Zero Emissions Vehicles
Electric cars represent a cleaner, greener way to use everyday transport. But they also offer compelling financial incentives for business and personal purchasers. These benefits include:
- 100% First Year Allowance for business owners available until April 2021
- UK Plug-in Car Grant of £3,500
- Reduced Employer Class 1A National Insurance Contributions (company cars only)
- Exemption from London Congestion Charge
- Salary sacrifice scheme available to business drivers
- Significant Fuel Savings vs. a comparable Combustion Engine Car and no car fuel benefit for company cars
- Significantly Reduced BiK Taxation for Company Car Drivers
- Scottish customers can enjoy interest-free loans of up to £35,000 (personal) or up to £100,000 (business)
100% First Year Allowance (FYA)
The First Year Allowance is claimable for up to 100% of the cost of qualifying low emission and electric cars, including Tesla (electric vehicle). That means that if you choose one of Tesla’s range of all-electric vehicles as your company car, your business has the ability to claim a 100% year one deduction for the cost of the vehicle.
The First Year Allowance is applicable to new vehicles only, and those considered new despite previously being used – for example, vehicles registered as a sales or service demonstrator by the manufacturer.
In the 2016 UK Budget, the Government announced that 100% FYA for businesses purchasing low emission cars will be extended for a further three years to April 2021.
More information: HMRC Capital Allowance Manual
UK Plug-in Car Grant
The ‘Plug-in Grant’ is a purchase subsidy of up to £3,500 which is deducted from the purchase price of new Tesla vehicles.
To benefit from the EV incentive scheme, we need to share your name and contact details and the VIN of your car with the Department for Transport. Please see the privacy notice of the Department for Transport.
More information: Plug-in Grant
Class 1A National Insurance Contributions and Company Car Tax (CCT)
Class 1A NICs based on the vehicle's P11D value and relevant BIK rate are applicable as determined by the official CO2 emissions and fuel type.
More information: An employer’s guide to Class 1A National Insurance contributions
London Congestion Charge Exemption
Tesla vehicles are 100% electric with zero emissions so they are exempt from the London Congestion Charge (once an initial £10 registration fee has been paid).
More information: TFL Discounts and Exemptions
Salary Sacrifice enables employees to sacrifice some of their gross salary in order to receive the benefit of driving a fully electric, high performance Tesla as a company car. Because the sacrifice is executed before tax and National Insurance contributions are applied, employees effectively save money in the acquisition of their new car in a similar way that other savings such as Childcare, gym membership or cycle-to-work schemes operate.
From a company’s perspective, this scheme provides an opportunity for organisations to offer employees a brand new, fully maintained at a lower cost than they could achieve in the retail market in a tax efficient way. The company may also benefit from reduced National Insurance contribution payments from the scheme.
Salary Sacrifice is either offered by the employee or the leasing provider and is not a Tesla financial product.
More information: Salary Sacrifice
Advisory Fuel Rates
As electricity is not classed as a road fuel, the car fuel benefit charge does not apply to electric charging. If an employee uses a company car, no benefit in kind arises on charging their vehicle at the workplace.
The advisory fuel rate for fully electric vehicles has been confirmed by HMRC as 4 pence per mile.
More information: AFR/AMAPs/MAR and Fuel Benefit
Significantly Reduced BiK Taxation for Company Car Drivers
Company car tax is designed to encourage employers and company car drivers to choose cars with lower levels of CO2 emissions; incentives are offered both to the company and to the recipient of the vehicle.
The company car tax payable by an employee is based on the vehicle's P11D value multiplied by the appropriate BiK rate (determined by the car's CO2 and fuel type) and the employee's income tax rate providing significant savings over high CO2 emitting vehicles.
Battery electric vehicles offer the lowest BiK rate of any fuel type. In the Autumn 2017 Budget, the Government confirmed charging provided by an employer to an employee in the workplace is not considered a benefit-in-kind.
More information: HM Revenue and Customs Taxable Benefits in Kind
Scottish Customers – Energy Saving Trust Loans
The interest free Electric Vehicle Loan of up to £35,000, funded by Transport Scotland , currently offers drivers in Scotland loans towards the cost of purchasing a new plug-in electric vehicle.
Further clarification on the application of any benefit or incentive should be discussed with your financial advisor given your specific business and accounting circumstances. This information is provided in good faith and is not to be considered financial advice, and it is the users’ responsibility to observe all applicable laws and regulations.
This information is intended as a general summary only, the customer’s experience may vary; it is not exhaustive and should not be relied on, in whole or in part, for investment or financial decisions. The specific circumstances of any person or entity should be discussed with the relevant financial advisor.
See a Representative Example.
Tesla Motors Limited is authorised and regulated by the Financial Conduct Authority for credit broking. Firm registration number 677768. Tesla Motors Limited acts as a credit broker and introduces customers to lending partners for Hire Purchase. Tesla Motors Limited registered office and postal address is 197 Horton Road, West Drayton UB7 8JD.