Securing your Assets by Sam Leeder
Our columnist highlights the pros and cons for businesses who want to go electric
As the UK moves towards a carbon neutral economy within the next 30 years, the government continues its promotion of electric vehicles. One of the ways it is doing this is by increasing the tax incentives for business users.
The purchase or lease of a fully electric car by the company qualifies for corporation tax relief. Additionally, the benefit in kind tax on the use of an electric car for an employee has been reduced from 6th April 2020 to zero in the first year and increasing to a maximum of 3 per cent over the next three years. This is a huge difference when compared to the tax on an equivalent diesel vehicle which could be 20 per cent.
In view of this, we are already seeing a big increase in company directors changing their Range Rover for a Tesla and adding it to their business insurances. Given the new incentives to employees, we are also expecting to see increasing numbers of companies purchasing or leasing these types of vehicles for employees.
So, given that there is going to be a large increase in electric vehicles, what are the insurance implications a business needs to consider?
When electric cars first came onto the market, many insurers were unwilling to provide cover as they had little experience of repairing them and considered a total loss following an incident to be a likely outcome. However, with the increase in numbers and more repairers being available, there are far more insurers who now provide cover.
That being said, most insurers still require a premium over a like-for-like non-electric car, due to the increased repair costs and the unknown consequences of accidents in respect of batteries etc.
In addition to this, most electric cars cost more to replace and so far the theft-attractiveness of them is unknown. As a general rule we are also seeing more insurers imposing a tracker requirement for vehicles over £50,000 in value, so it is likely this will be a requirement for many electric cars on the market at the moment.
We are also seeing insurers being more strict regarding who they will allow to drive these vehicles, particularly for the premium vehicles such as Tesla, Jaguar, Audi etc. You can therefore expect to have to name drivers and possibly have an age restriction on them of over 25 or 30.
So, whilst there are savings for the company and the individual, there may be some additional costs to take into consideration when deciding whether to go down this route. We would therefore recommend consulting your insurance broker in addition to your accountants before making a final decision.
Sam Leeder ACII
Actus Insurance
samleeder@
actusinsurance.co.uk
0114 2903624
07718 189476
