Road to Zero

This government policy, released in July 2018, targets at least 50% – and as many as 70% – of new car sales to be ultra-low emission by 2030, as well as up to 40% of new vans.

Since 2009, the Office for Low Emission Vehicles (OLEV) has deemed an ultra-low emission vehicle (ULEV) to be a car or van that emits less than 75g/km of CO₂.

Recognising advancements in technology, from 2021 it expects ULEV emissions to be defined as less than 50g/km.

To encourage businesses to choose ultra-low emission vehicles, the Road to Zero proposes a number of government incentives for electric vehicles, as well as the development of a charging infrastructure to enable vehicles, such as plug-in hybrid and electric cars and vans, to complete similar journeys to their petrol and diesel counterparts.

Five major cities outside London have been given a mandate to deliver pollution reduction targets as part of the national Clean Air Zone strategy.

While London has chosen to call its Clean Air Zone the Ultra Low Emission Zone, other cities will use the name Clean Air Zone, but have similar emissions standards in place and will charge vehicles that do not meet these.

Birmingham, Leeds, Derby, Nottingham and Southampton are the first tranche required to implement action plans to reduce pollution levels through the development of similar congestion charges as those already in place in London’s Ultra Low Emission Zone. These are being developed at a local level and will require government approval.

See local Clear Air Zones (CAZ) below for more details.

The government has confirmed it plans to extend the current 100% first-year allowance, for any expenditure incurred to install new and used electric vehicle charging points in the workplace, to 31 March 2023.

This is in addition to savings provided by the Workplace Charging Scheme. This business grant provides up to £500 per socket for up to 20 sockets, helping to reduce the cost of workplace charging points by up to £10,000 per applicant business.

The latest Plug-in Car Grant offers 35% of the vehicle purchase price up to a maximum of £3,500. This is available for cars with CO₂ emissions of less than 50g/km and a zero-emissions range of at least 70 miles.

The Plug-in Van Grant provides 20% of the purchase price, including VAT, up to a maximum of £8,000. This is for commercial vehicles with CO₂ emissions of less than 75g/km and a zero-emissions range of at least 10 miles.

These grants directly impact whole-life costs, which makes plug-in hybrid and electric vehicles a valid consideration versus internal combustion engine (ICE) models.

NB: See more details of the available government incentives for electric cars and vans.

Our specialist advisors can help you establish whether, and how, electric vehicles could be a fit for your fleet, as well as help you make your EV business case.

There has been recent confirmation that the advisory fuel rate for pure electric cars is 4p per mile. Plug-in hybrid and hybrid vehicles will continue to be treated as petrol or diesel models in terms of mileage reimbursement.

Both company car drivers and fleet managers need to be aware of this newly announced rate so drivers can consider any tax implications, and employers can ensure they are not paying more mileage expenses than are necessary.

The current lease rental restriction has been reduced from 130g/km to 110g/km.

This means that any lease vehicles with emissions of 110g/km or less will not face a rental restriction, making the cost of the lease fully deductible against taxable profits.

For lease vehicles with emissions of more than 110g/km, businesses can only offset 85% of any rental payments against their taxable profits.

BiK and NIC: CO2 emissions are the basis of our government’s taxation policy and are being used as a lever to encourage company car drivers and employers to consider plug-in vehicle options.

Current policy for BiK and NIC is known up to the 2020/21 tax year, with company EV drivers benefitting from an 87.5% reduction in company car tax, from 16% to 2% BiK rate, from the 2020/21 tax year, and businesses from a corresponding NIC perspective.

In addition, ULEVs with CO2 emissions from 1-50g/km will benefit from a reduction in BiK rates to between 14% and 2%. The specific rate will depend on its range in zero-emissions mode – below 30 miles has a BiK rate of 14% whilst a range of 130 miles or more will attract a rate of just 2%.

Details of BiK tax rates beyond 2020/21 are yet to be released.

NB: In addition to considering these savings as part of your EV fleet analysis, it’s important to make sure plug-in hybrid or electric vehicles are fit for purpose for both a driver’s job function and their lifestyle outside of work.

Our Future Fleet Analysis and EV-4-ME? tools are designed to help fleet managers and drivers to evaluate EV viability.

WLTP figures: CO2 values used for the taxation policy are currently NEDC-correlated figures. WLTP values will be used from 2020/21 tax year (April 6th 2020). The government is yet to announce whether BiK rate and Vehicle Excise Duty bandings will be adjusted to recognise the higher WLTP emissions figures.

Pure electric vehicles will not be affected by this decision, but internal combustion engine (ICE) and plug-in hybrid models potentially will be.

NB: Latest news on this will be posted on our WLTP guide and social media.

WDA: these heavily favour electric vehicles and ULEVs with CO2 emissions no higher than 50g/km. These models benefit from 100% first–year allowance.

Cars with CO2 emissions from 51g/km up to 110g/km are written down at 18% per year, while those with CO2 emissions above 110g/km attract a 6% writing down allowance.

Light commercial vehicle VED study: the report on this consultation is due imminently. The study has investigated whether to introduce graduated bands for light commercial vehicles to establish VED rates based on CO2 emissions, in the same way as these rates are determined for cars.

There are environmental incentives due from April 2021, with bands and rates to be announced before the 2019/20 Budget which will have an inevitable impact on whole-life costs.

Fleet and finance managers should note that zero–emissions electric vans are already zero-rated. the impact here will be on ICE models, potentially changing the difference between these and ultra-low emission and electric vans.