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 £350 per socket for up to 40 sockets, helping to reduce the cost of workplace charging points by up to £14,000 per applicant business.

The latest Plug-in Car Grant offers 35% of the vehicle purchase price up to a maximum of £3,000. This is available for cars with a list price below £50,000, 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 2024/25 tax year, with company EV drivers benefitting from 0% BiK rate in 2020/21 rising at 1% each year until 2022/23 where it is then sustained at 2% until April 2025. Businesses benefit from a corresponding NIC perspective too.

In addition, ULEVs with CO₂ emissions from 1-50g/km benefit from lower BiK rates too, but the specific rate will depend on its range in zero-emissions mode. Those registered from 6 April 2020 with an electric only range of more than 130 miles will benefit from a BiK rate of 0%, rising all the way up to 12% for those that can travel less than 30 miles. Cars registered before this date have rates ranging from 2% up to 14%, subject to the same mileage parameters.

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: For cars registered from 6 April 2020 the CO₂ values used for the taxation policy are WLTP. Cars registered prior to this date will continue to be taxed on their NEDC-correlated figures.

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

WDA: These heavily favour electric vehicles and ULEVs. Zero emission vehicles benefit from 100% first–year allowance.

Cars with CO₂ emissions between 1 and 50g/km benefit from 18% per year and those with emissions above 51g/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.

The proposal is for a 2-category system, based on weight, to be introduced from April 2021, with zero-emissions vans being zero-rated. Confirmation is still awaited on bands and rates, 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.