Electric Cars and their usefulness in the Care Home environment

Ownacarehome in discussion with Rachael Anstee, specialist accountant and advisor to the social care sector at Hazlewoods Healthcare, looking at the benefits of an electric car in a care home setting.

We asked Rachael ‘is an electric car something a care home owner should be considering as part of their green journey?’

Rachael said : “We are starting to see more electric vehicles on the roads, particularly in city centres where electric charge points are more available.  However, availability and vehicle make options continues to hamper the purchaser together with mileage limitation and electric charge point infrastructure.  So, it is probably still early days for the transition to an electric vehicle depending upon the use the care home wishes to have from it and where the cost versus benefits is within their green strategy timeline.”

“However, EVs produce fewer greenhouse gases and air pollutants than petrol or diesel cars even when you take into account their production process.”

“Concerns over battery lifespan and the charging infrastructure are definitely areas to consider when purchasing an EV, thus it is not just about tax relief and running costs.”  “Lithium mining is another environmental factor when thinking about the green supply chain.”

‘What about reduced running costs?’ 

Rachael commented: “A pure electric vehicle (EV) could save money compared with for example, a traditional diesel car, but you do need to take into account the current cost of living running costs and how long it takes to charge your EV.”

“EV’s are currently exempt from road tax which is another current cost saving.  However, there are already talks that the Government will at some point seek to bring in a new running tax on electric vehicles with some current ideas about a charge per mile on EVs.”

‘What tax reliefs are currently available?’

Rachael said: “If we look at Capital Allowances for non-electric cars (not commercial vehicles) the annual tax relief on purchases is limited to 6% or 18% of the purchase price of the vehicle, on a reducing balance basis each year.  A first year allowance on the purchase of an EV can be claimed meaning that 100% of the cost of the car in the year of purchase can be claimed.”

‘What about leased cars?’

“Vehicles with CO2g/km emissions of 50 or higher, are subject to a tax restriction of 15% of the allowable costs.”

‘Could you tell Ownacarehome about the private use of cars from a tax perspective?’

Rachael commented: “For sole trade businesses and partnerships, private use by the business owners would restrict the running costs and capital allowance tax reliefs that can be claimed.”

“Where an employer provides a car to a director/employee which can be used for personal journeys, the employee will be subject to a taxable benefit in kind, which can be substantial for a higher rate tax payer.”

‘What is the range for benefit in kind charges on cars?’

Rachael confirmed: “The current charges range from 2% of the car list price for pure electric cars, or the best performing hybrid cars, to 37% for the higher emitting cars.”

In Summary

There are clearly advantages and disadvantages to purchasing an electric vehicle with all options to be considered including the purchase cost, the running costs, environmental impact, and current tax reliefs.

Rachael comments: “If you are thinking about changing your business car, consider the commercial aspects as well as your green strategy alongside which vehicle is right for you.”