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Ahead of the ban on the sale of new petrol and diesel cars by 2030, the electric car market has never looked better. With more options available and public charging points in ever-increasing supply, those looking for more environmentally friendly motoring might not need much convincing.
But for anyone that may need a little extra persuading, there are several financial incentives to help sweeten the deal too. Whether you’re planning on buying a brand-new electric car or you’re still doubtful about going green, we’ll detail the grants, incentives and discounts that are available to those making the switch below.
Also known as the electric car grant, the PICG is a grant provided by The Office of Zero Emission Vehicles (OZEV) and is available to buyers of eligible electric cars, vans, and motorcycles. Through the grant, it’s possible to get a discount of up to £2,500 off the purchase price of a brand-new – not second-hand - electric vehicle, providing it meets the following criteria:
Introduced in 2011, the grant is designed to encourage people to switch from petrol and diesel cars by reducing the cost of electric and plug-in hybrid models. Along with higher taxes for new diesel cars, the grant aims to help the country achieve its targets for cutting CO2 emissions. And so far, it seems to be working: the PICG has led to more than 285,000 electric vehicle purchases as of March 2021.
Originally, the PICG was worth up to 35% of the cost of a new plug-in or pure-electric vehicle, up to a maximum of £5,000 when the grant was first introduced. Seven years later, the grant took another cut, reducing the amount to £4,000 and excluding plug-in hybrids altogether. Since then, the grant has dropped by £500 each year, which is how we’ve ended up at the current amount.
So, how does it work? The good news is you don’t have to do anything if you’re an EV buyer. Your dealer will handle all the paperwork and then claim the £2,500 amount from OZEV after deducting it from the list price. This is why you’ll usually see new EVs advertised with prices that include the electric car grant.
Note: the PICG is scheduled to come to an end in the 2022-23 financial year. Originally set to come to an end in March 2020, pressure from the car industry led to the renewal.
Another incentive designed to encourage motorists to switch to electric vehicles, the EVHS covers 75% of the cost to buy and install a home recharging station up to £350.
With home chargers being the most convenient and cost-effective method of charging, it’s an attractive discount. But to make sure you’re eligible, there are a few things to keep in mind, namely:
As an applicant, you’ll also need to have dedicated off-street parking at your property too. It’s also possible to apply for two charging stations (the grant is per installation) at the same property – providing you have two electric vehicles. Please note that the scheme only supports “smart” charge points, i.e., those which communicate via Wi-Fi and can be operated remotely.
Much like the PICG, most of the heavy lifting and paperwork is taken care of by the charge point supplier. Providing you qualify, the installer will then claim the subsidy on your behalf, leaving you to pay the discounted rate.
The scheme was launched in 2014 and currently does not have an end date. Should the grants cease, the government says that it will aim to give four weeks’ notice.
While not technically a government grant, there’s more good news for electric vehicle motorists in the form of road tax exemptions. Road tax, officially known as Vehicle Excise Duty (VED), is calculated based on the CO2 tailpipe emissions of your vehicle, its list price, and the year it was registered.
Obviously, the main feature of zero-emission, pure-battery vehicles is right there in the name. Because they produce no emissions, they’re entirely exempt from VED.
It’s not just homes that can benefit from government grants and incentives either.
For businesses, charities and public-sector organisations aiming for greener performance, the WCS helps with applying for funding towards the installation of electric vehicle charge points.
Much like the EVHS, the WCS reduces the purchase and installation cost of a new single-socket workplace charging station by 75% and is also capped at £350. What’s more, a single business can claim for up to a maximum of 40 charge points – whether that’s 40 single sockets or 20 double-socket charge points.
To qualify, your business, charity or public-sector organisation must have the following:
Unlike the previous two grants, the WCS works through a voucher-based system. First, you’ll have to complete the following application. Should you be successful, you’ll be emailed a voucher code to present to your OZEV-approved installer. Your installer will then use this voucher to claim the grant after the installation has been completed. You have 120 days to use the voucher code from the date of issue.
There are also capital allowances on fully electric cars that business owners can use to buy an electric fleet for their business. This means they can deduct the full purchase price from their annual profits and reduce their corporation tax bill in the process
Similarly, employees can lease an electric company car using salary sacrifice. The cost of the vehicle will be taken out of their pre-tax earnings; while this means a reduction in salary it has the added benefit of reducing their tax bill.
Additionally, this means they’ll have to pay a Benefit In Kind tax. However, since the BIK rate for electric cars is 1% of the car’s list price (compared to up to 32% for petrol and diesel cars) there are certainly tax savings to be made.
For more information on electric cars, check out the following from the Brindley Group:
Are Electric Cars Cheaper to Run?
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