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What are the tax benefits of leasing an electric van?

Leasing is one of the most popular ways to finance electric vans, and for good reason. There are significant electric van tax benefits when you choose electric van leasing, making it a smart choice for many business owners, employees, and other commercial entities. Drivers can also save on everything from running costs and depreciation to maintenance and road tax.

Businesses are also under increased pressure to consider their environmental impact, while still making cost-effective financial decisions. This has made electric vans an increasingly popular zero-emission option, available on both business leasing and personal leasing agreements.

Let’s delve into some of the key advantages of leasing an electric van and outline what customers should consider before choosing to lease with Synergy.

What Is The Difference Between Buying And Leasing An Electric Van?

The main difference between buying and leasing is that a customer will enter into a leasing agreement without intending to own the vehicle. Leasing has become a popular alternative to owning a vehicle outright. Customers make a smaller initial payment and then pay fixed monthly amounts until the agreement ends and the vehicle is returned.

As a result, leasing is often the most affordable way of securing an electric van, as there’s no need to pay towards the vehicle’s full value. There’s also no need to worry about depreciation and disposal costs as the finance provider remains the vehicle’s owner throughout.

What Taxes Can You Save When Leasing An Electric Van?

Specific electric vehicle tax benefits were introduced in April 2020 to encourage drivers to move to an electric offering. The Benefit-in-Kind tax (BIK) rate for electric vans was reduced to 0%, which now matches that of an electric car. Electric vans are also exempt from road tax, ULEZ compliant, and congestion charge exempt.

Is Electric Van Leasing 100% Tax Deductible?

Electric van leasing offers the same tax benefits for VAT-registered businesses as other van leasing deals. Lease payments are a tax-deductible expense against a business’s profit and loss accounts.

This means a business can claim back 100% of the VAT on any lease and maintenance payments made whilst leasing an electric van. However, this is only applicable if the van is explicitly used for business purposes, with no personal use.

Benefit-In-Kind On Company Electric Vans

If you’re an employee and drive one of your company’s vans, you may be liable to pay Benefit-in-kind (BIK) tax. BIK will apply to an electric company van if an employee uses it for their own private use alongside business journeys.

BIK is at a rate of 0% if a van is leased for business purposes only, with no personal use. It is imposed at a flat rate, but with the expectation that companies notify the tax authority accordingly.

Benefit-In-Kind On Fuel For Company Electric Vans

If you have a company van your employer has provided, you’ll likely need to consider benefit-in-kind on fuel, too. This will apply if you use the van full-time, including personal journeys and out-of-business hours.

However, if you are provided with a zero-emission electric company van, things are slightly different. No Benefit-in-Kind is currently imposed on the electricity used for electric van charging. However, if you need to charge the van at home, you should be able to claim back part of the electricity bill as a business expense.

Electric Van Leasing Tax Benefits

There are a number of key electric van tax benefits which have been introduced to make leasing more accessible and appealing.

These benefits affect two of the most popular van finance types — finance lease and contract hire. Once a business has entered into a finance lease, for example, it can offset monthly payments against any annual profits. These tax benefits also apply to contract hire leasing, and a business will not have to pay any VAT on monthly payments.

Other Benefits Of Leasing An Electric Van

The benefits of electric van leasing aren’t just limited to tax savings. EV van customers can make substantial savings on fuel when compared to petrol or diesel drivers, with electric vans proving to be cheaper to run than combustion engine alternatives.

Not only can the move to electric help company van drivers save money, but it can also have a positive environmental impact. As businesses look to make sustainable and future-proofing decisions, it improves their brand identity and green credentials.

Should I Buy Or Lease An Electric Van?

If you’re considering the move to an electric van, there are several ways to finance it. Ultimately the right choice will depend on your business needs and the type of van your business requires. Consider how often you might look to get a new van and if you’re interested in ownership or happy to hand it back at the end of the agreement.

Synergy can help make electric van leasing easier for you and your business. Our team can provide details of electric van charging point installation at home or work to make the transition to electric easier. We have access to some of the best electric van lease deals for business and personal leasing. So, if you think electric van leasing could work for you, get in touch with the team at Synergy Car Leasing today.

This article should be used as a guide only. Benefit-in-kind tax is for information only and is subject to change. Information is supplied by a third party, and Synergy accepts no responsibility for errors in the data. Please contact us if you wish to receive a quotation.

Eligibility criteria, terms & conditions apply. You will not own the vehicle. Vehicles are subject to availability. You should verify this information with your tax adviser or accountant before proceeding with your contract.