The UK government has just published its Transport Decarbonisation Plan and its 2035 delivery plan on transitioning to zero emission vehicles. The ambition is for the UK to become the fastest nation in the G7 to decarbonise cars and vans. But what does this mean for small businesses who use road transport? Here are some of the policies (and potential policy directions) that you should be aware of.
Subsidies for new purchases continue
The government’s aim is for electric vehicles to become cheaper than their petrol or diesel equivalents. Price parity is expected in the mid-2020s, and electric will become cheaper after that. To reduce the sticker price of zero-emission vehicles in the meantime, the government is investing £582 million into the existing Plug-In Grant scheme. This takes up to £2,500 off the price of an electric car, £3,000 off the price of a small van and £6,000 of the price of a large van. As the buyer, you don’t need to do anything to benefit from this grant; the dealer will take it off the forecourt price.
The government’s intention is to gradually reduce the Plug-In Grant before phasing it out in 2022 or 2023. So if you are intending to replace vehicles in your fleet, now is the time to look at electric options if you want to benefit from government-subsidised savings on the sticker price.
Small businesses now get chargepoint subsidy
The Workplace Charging Scheme, helping busineses with the upfront costs of buying and installing EV chargepoints, is set to continue. It covers 75% of these costs, capped at £350 per socket. In April this year the scheme was extended to small businesses and charities. As part of the drive to boost UK tourism, B&Bs are also eligible for the grant, which means they can offer EV charging as a benefit to visitors.
Company car tax, also known as Benefit in Kind (BiK), is much lower for cars with zero and low emissions. It is now 1%, comparing favourably with 22% for a low-emission hybrid and up to 37% for the most polluting cars. The BiK for zero-emission cars rises next year, but only to 2%. This means that if you offer employees an electric company car, they will probably pay less than a tenth of the tax they would on a similar petrol or diesel car – making it a much more attractive perk.
The Enhanced Capital Allowance scheme continues for companies and unincorporated businesses. This allows you to write off 100% of the cost of the car against taxable income for the period you bought it in.
Drivers of zero-emission cars and electric vans also benefit from paying no Vehicle Excise Duty (VED) at all.
All these tax breaks are scheduled to continue until March 2025. The BiK rates are likely to rise, but the promise is that they will continue to be “favourable” in comparison with BiK rates for petrol or diesel cars.
A simpler charging experience
The government will be tackling the “confusopoly” of EV charging points by mandating a single payment metric for all of them, making it easy to compare prices at a glance, and standardising payment methods. Good Energy has already done a lot of groundwork on this issue through our investment in Zap-Map and the Zap-Pay system, which allows you to find a chargepoint and pay for it through the same app.
It will also become easier to find a chargepoint, both because capacity is increasing and because the data on availability will become more accessible. (Currently, over 90% of the country’s EV drivers use Zap-Map to help them find chargepoints.) By 2023, each motorway service area will have at least six high-powered chargepoints, so there will be no need to check in advance.
Rollout of green number plates
Since December 2020, new zero-emission vehicles have been issued with green number plates. This is intended to make it easier for local authorities to implement and enforce Low-Emission Zones. These zones are already in place in Bath, Bristol and London, and likely to be introduced in more UK cities in the next couple of years.
More gradual switch for HGVs
Zero emission technology for heavy goods vehicles has lagged behind that for cars and vans, so the government plans to move on this more slowly. The plan is to end sales of all HGVs under 26 tonnes that aren’t zero-emission by 2035. For HGVs over that size, the deadline will be 2040, but both deadlines could happen sooner if the technology allows. It is not yet clear how the problem of HGVs will be solved, because the bigger the vehicle, the more difficult it is to power it with zero emissions. There is a plan to trial zero-emission HGV technology on UK roads this year, testing the potential of battery electric trucks, but these are in the smaller weight category.
The transport strategy suggests that hydrogen may be a solution for bigger HGVs and “the parts that batteries cannot reach”. This is why the government has been investing £23 million in the Hydrogen For Transport programme and plans to publish a hydrogen strategy this year.
It is possible that in the future zero-emission vehicles will have a higher weight limit, which would allow for the additional weight of batteries or hydrogen storage tanks.
The government is also considering options for how the “last mile” of freight trips can be done with lighter and more sustainable alternatives to HGVs.
Support for e-bikes
The shift to electric is not just about larger vehicles. The transport strategy highlights the “enormous opportunities” from so-called zero-emission light powered vehicles, or ZELPV. This includes e-bikes, e-trikes and electric rickshaws. These have the potential to replace cars for many urban trips, especially with low vehicle occupancy and light loads. This may make them the ideal solution for the “last mile” problem in transport logistics. Many businesses are already using them for local deliveries, and they may also become a key part of national supply chain logistics.
The move to decarbonise the UK’s transport presents many opportunities for businesses, from electrifying your fleet to investing in chargepoints. To find out how Good Energy can support your business in the transition to electric, contact email@example.com or 01249 766799.