Why Plumbing and Gas companies are going electric with their fleet

More Plumbing and Gas companies are taking electric cars for their fleet 

EVs are in the news on an almost daily basis in the UK, with various news and media outlets peddling various pros and cons on the switch.

But what is somewhat unequivocal, is the importance of UK businesses and fleets properly analysing their car requirements and comparing this to the current options available to them. For many plumbing and gas business owners with a successful limited company, what car (or van) they should lease next is something which is high on the agenda.

At the heart of this, is the ZEV Mandate which is in place to ensure that political and social momentum is very much driving the fuel change culture. But for businesses, rather than consumers / retail customers, there are some solid tax benefits behind the green revolution and this is often missed because of the emotive debates taking place.

For example, there has been conjecture behind costs / affordability with EVs. So it wasn’t a surprise when VW made a big announcement this week on their new ID.1 which will see a £17,000 vehicle enter the market, centred around “affordable mobility”.

This small EV will be about promoting electric mobility for all. This is in direct contrast to the submission that these will be the reserve of the wealthy. And for the German car maker to be able to manage the ongoing threats, which some of the Chinese brands now pose, is of paramount importance. The ID.1 is set to launch in 2027.

But at May 2024, VW’s sister company, Audi, have now released their pièce de résistance in the form of the Audi Q6 SUV . Supplementing the existing Q4 Estate and Sportback plus the bigger Q8 e-tron, this amazing BEV is the first of its kind built on the dedicated VW PPE architecture. This means an EV created on a wholly EV specific chassis and infrastructure. But while this is anything other than cheap, for business customers looking to lease or purchase their next new EV, this does at least offer some financial benefits including:

•  100% Write-down allowances for purchases - if you hire purchase or contract purchase your Q6, then you can claim 100% of the cost (including any interest) in year 1 against your Corporation Tax bill. This is ONLY available for a zero-emission vehicle, i.e. one which emits no CO2 (shown as g/km) from the tailpipes. For petrol or diesel options, the level of write-down is significantly lower because of the emissions they emit. However, do bear in mind that ownership products do pass the risks across to the customer, so if the residual value changes, your business could be exposed; and        

•  Rental relief - for  contract hire and leasing, the way in which the tax is managed is different to the purchase style noted above. The monthly rentals (including the initial rental) paid each year are offset against your Corporation Tax. So, in some ways, the tax relief is somewhat less immediate than the purchase style products. Because of the zero-emissions, 100% of the rental can be offset against your tax. For more polluting vehicles, this is limited to 85% of the rental. With contract hire, the key point to note is that all risks of the vehicle are passed to the finance company and not the customer. 

But there are other considerations for financial directors and MDs of plumbing and gas companies to consider if contract hire / leasing is the route moving forwards. The notion of VAT is something which is often mentioned within the transaction.

While we always encourage the use of accountants to assist in the process, as a rule of thumb if you are registered for VAT then up to 50% of the VAT on the finance and 100% of the VAT on the maintenance can be reclaimed. In the case of any van or pool car, then 100% of the VAT can be reclaimed. For fuel / charging, any investment into on-site infrastructure at your HQ or depot is full expensing, which means that you can offset all the cost of a charge point against your tax bill.

And the good news is that because electricity does not count as fuel, any charging on site does not create a tax implication for the driver / employee. However, do note that from 1 June 2024, HMRC did change the Advisory Electric Rate (AER) for electric cars from 9 pence per mile to 8 pence per mile. This does need to be communicated to any of your drivers / fleet operators.

Where many senior managers and directors within a heating business are benefitting is with the company car tax savings the Q6 offers. Traditionally combustion options like the Q5 and Q7 SUVs, as stunning as they are, will have led to sizeable monthly income tax bills.

Having a car via your company is not “free” and there has to be a calculation performed in respect of tax. The value of the vehicle, emissions and the driver’s income tax threshold will determine the amount payable. In short, the more polluting and expensive the vehicle is, the more your individual tax exposure is.

In some cases, this can be a sizeable amount - equivalent to a mortgage or rent! Because of the zero-emissions, the EV is subject to a low BiK threshold which essentially results in low tax bills. Taking the Audi Q6 e-tron S Line, a standard car would cost the 40% tax payer of circa £50 per month. A petrol or diesel Q5 would be more in the region of £400 - £500 per month. As we mentioned right at the start of this article, this is a great financial reason to take your plumbing merchant electric into 2024.

But how does the Audi Q6 EV actually perform, is it a good car?

This AWD SUV will have a 94.9 kWh usable battery which will offer 0 – 62 times of 5.9 seconds, 130 mph top speeds and 285kW (or 382hp). Expect a combined winter range of 240 miles with warmer weather allowing for 320 miles – a 285 mile combined.

On charging, the 11 kW AC max will allow 10 hour and 15 min 0 – 100% charging times with the 270 kW DC maximum allowing 21 minute 10 – 80% times. A cargo volume of 526L is available with this car. It has a vehicle fuel equivalent of 122 mpg. You can tow with this EV – 750kg (Unbraked) and 2400kg (Braked). It also has no V2L or V2G capabilities (so far). The Heat Pump is standard.

Need more help and advice on business EVs?

Just get in touch with our team on 01942 910 001 or by emailing us at [email protected]

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