All Tesla cars have zero emissions and may be eligible for financial incentives that encourage clean energy use in the UK.
London Congestion Charge
The London Congestion Charge is a daily charge for driving a vehicle within the charging zone in central London. As of 22nd June, the charge is now applied between 07:00 and 22:00, 7 days per week. The daily charge has also risen to £15 per day for an indefinite period. Currently, only vehicles that meet Euro 6 standards (petrol and diesel), that emit no more than 75g/km of CO2 and have a minimum 20 miles zero emission capable range will qualify for the 100% cleaner vehicle discount. From 25th October 2021, the cleaner vehicle discount will change so that only battery electric vehicles are eligible.
More information: TFL Discounts and Exemptions
Ultra Low Emission Zones
Tesla vehicles are able to access the London Ultra Low Emission Zone, without paying the noncompliance fee of £12.50. The current Central London ULEZ is due to expand significantly from Central London to cover a much larger zone in October 2021. The cost of paying the ULEZ over 3 years could be up to £13,650, when driving into the zone on a daily basis.
More information: Ultra Low Emission Zones
Vehicle Excise Duty
Company Car Tax (Benefit in Kind)
From 6th April 2022, both new and existing Tesla cars are eligible for a 2 percent BiK rate for the 2022/23 tax year. The BiK rate will be held at 2 percent for 2023/24 & 2024/25. The average petrol or diesel vehicle has a BiK rate of 20 to 37 percent.
100% First Year Allowance (FYA)
First Year Allowance is claimable for up to 100% of the cost of qualifying low emission and electric cars. By choosing a Tesla car, your business can claim a 100% year one deduction for the cost of the vehicle.
The First Year Allowance is applicable to new vehicles and cars considered new despite previously being used, such as vehicles registered as a sales or service demonstrator by the manufacturer.
In the March 2020 UK Budget, the Government announced that 100% FYA for businesses purchasing low emission cars will be extended until 31 March 2025.
More information: HMRC Capital Allowance Manual
Car Fuel Benefit Charge
As electricity is not classed as a road fuel, Tesla cars have no fuel benefit charge. That means employees are exempt from paying Benefit in Kind on electricity provided by their employer to charge an electric company car.
More information: Tax benefits for ultra low emission vehicles
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 occurs when 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
Class 1A National Insurance Contributions
Class 1A NICs based on the vehicle's P11D value and relevant BiK rate are applicable as determined by the official carbon emissions and fuel type.
More information: An employer's guide to Class 1A National Insurance contributions
Salary Sacrifice enables employees to sacrifice some of their gross salary in order to receive the benefit of driving a fully electric company car. As the sacrifice is executed before tax and National Insurance contributions are applied, employees effectively save costs 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 new car 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 employer or the leasing provider.
More information: Salary Sacrifice