Two recent changes relevant for EV drivers and corporates that could be overlooked by businesses are the ‘OLEV grant’ and Benefit in Kind tax (BiK) that have come into effect this April.
The Office for Low Emission Vehicles (OLEV) has made changes to the electric vehicle homecharge scheme and workplace charging scheme, which add further incentives to the list of reasons why EVs are more viable for businesses, even if there is still a long way to go.
By offering funding for the purchase and installation of charge points, the OLEV grant for charging infrastructure has played a crucial role in helping businesses integrate EVs into their fleets for years. This has meant EV drivers and businesses have been able to install EV chargers at a much lower price than our neighbours in Europe who typically pay three times more per charging unit.
The OLEV grant will be reduced from £500 to £350. This could actually result in more EV drivers getting support, making EVs common on our roads. As the changes result in a slightly smaller grant, but means the funding can be spread much wider. The government predicts that almost double the number of people will now be able to access the grant – 57,000 compared with 30,000.
Changes to the grant will also allow for more chargers to be installed in the workplace. Alterations to the funding will now enable up to 40 charge points to be installed per organisation, whereas the old scheme supported only up to 20. This is a significant step that cannot be overstated. It offers a platform for businesses to invest in EVs on a greater scale than we have previously seen in the UK. In addition, this could support EV adoption in wider society by ensuring there is sufficient workplace charging for employees who personally purchase an EV, and for those who don’t have the opportunity to install a home charge point.
Another big change on the horizon is the change to Benefit in Kind tax (BiK), which is paid by employees who have company cars. In short, the new BiK rates for EVs are unprecedented and offer a huge incentive for businesses to consider EVs over internal combustion-engine vehicles. As of 6 April, employees who drive a company EV will pay nothing (0%) this year, and only small amounts in BiK tax for the next few years (1% in 2021-22, 2% in 2022-23). Compared to rates for ICE vehicles, which range from 15% to 37% depending on the CO2 emissions, the savings for employees will be significant and it’s not just good news for staff. This saving also has a knock-on effect for businesses, as the employer’s National Insurance Contributions will also be significantly reduced for the next few tax years.
Alongside tax incentives, EVs enjoy lower running costs and are less impactful on the environment, which is increasingly important in terms of corporate image. And, the benefits don’t end there. For larger firms, adopting a greener fleet will also contribute to their Energy Savings Opportunity Scheme’s compliance, a mandatory assessment from the government that ensures UK organisations are taking action to save energy in their operations.
All this encouraging news begs the question of what’s next? And, looking across the North Sea, our European neighbours offer a great blueprint for areas our government might want to consider. In Norway, for example, import duties on EVs have been removed and EV drivers can park for free and drive in bus lanes. These incentives have been a resounding success for Norway and mean sales of EVs and plug-ins now make up 55%, compared to the UK’s 3%.
EV incentives that are good for business are good for the wider uptake of vehicles, it’s an open secret within the EV industry based on years of evidence. There’s still much to be done in the UK to achieve levels of EVs on our roads similar to countries such as Norway, but changes to the OLEV grant and BiK represent a good start, and we should be excited for what’s next.
UK general manager, NewMotion
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