Why EV Leasing is a Smart Option Amid Upcoming Tax Changes
In a move that’s set to reshape the landscape of electric vehicle (EV) ownership, significant car tax changes are on the horizon. From April 1, 2025, EV drivers will face new financial considerations, potentially adding up to £600 per year to their motoring costs. However, this shift also presents an opportunity for savvy drivers to explore alternative ownership models, with Electric EV leasing emerging as an increasingly compelling option for both business and personal customers.
The New Tax Reality for EV Owners
The forthcoming changes coming into effect from 1 April 2025 will see electric cars subject to Vehicle Excise Duty (VED) in the same manner as their petrol and diesel counterparts:
New zero-emission cars registered on or after 1 April 2025 will pay £10 a year in their first year of registration and £195 a year from the second year onwards. Zero emission cars first registered between 1 April 2017 and 31 March 2025 will pay £195 a year, and the ones registered between 1 March 2001 and 31 March 2017 to pay £20 a year.
Luxury EVs priced over £40,000 will face an additional £410 ‘expensive car supplement’ in years two to five of ownership.
These changes apply to both new and existing vehicles, effectively removing the current £0 tax band for zero-emission vehicles.
EV Leasing: A Smart Solution in Changing Times
With two-thirds of all electric vehicles priced above £40,000, the higher road taxes, in addition to the initial investment, make switching to a zero-emissions vehicle less appealing. As the EV landscape evolves, leasing is positioning itself as an intelligent alternative to outright purchase.
Mitigate Tax Impacts: By leasing, you can potentially avoid the brunt of the new tax changes, as the leasing company often bears the burden of vehicle taxation.
Predictable Costs: With fixed monthly payments, you can budget more effectively, avoiding unexpected expenses associated with ownership.
Flexibility for Businesses: ElectriX offers tailored business leasing solutions, allowing companies to maintain a modern, eco-friendly fleet without significant capital outlay.
Lower Initial Costs: Leasing typically requires a lower upfront payment compared to purchasing, making it easier to transition to an EV without a substantial initial investment.
Access to Newer Models: ElectriX’s leasing options allow you to drive the latest EV models without the long-term commitment, ensuring you always have access to the most up-to-date technology and efficiency improvements.
The ElectriX Advantage
ElectriX offers a comprehensive range of vehicles, competitive pricing, and a customer-centric approach. Whether you’re a business looking to electrify your fleet or an individual eager to embrace sustainable driving, ElectriX offers leasing options that can be tailored to your specific needs.
With ElectriX’s leasing solutions, you can stay ahead of the curve, enjoying the latest in electric vehicle technology without the long-term commitments and potential tax burdens of ownership.
Contact ElectriX today to discover how our leasing options can keep you moving forward in the electric revolution, no matter what changes lie ahead on the road.
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The world is changing and sustainability continues to be more and more of a priority for many people. Electric vehicles (or “EVs”) have become one of the most popular ways for people to reduce their environmental impact, so it’s perhaps unsurprising that there are now more than one million EV drivers in the UK.
But running an electric car still costs money, so understanding all the costs involved is crucial to help you decide if an electric vehicle is right for you.
In this article, we’ll explore all the expenses involved with running an electric car and share some of the benefits and disadvantages of having one – from fuel savings, right down to cost per mile and servicing.
Electric car running costs
Owning and operating an electric car involves some costs that differ from conventional petrol or diesel cars (also known as “Internal Combustion Engine” or “ICE” cars). Even though some costs currently might be higher compared to traditional vehicles, such as the purchase price, others might be less than you think, especially in the long run.
Here are some of the main costs associated with running an electric you need to be aware of:
Up-front purchase price
Yes, the purchase price of electric cars is generally higher than traditional petrol or diesel cars. The reason is mainly due to the cost of the car’s battery, which is typically made of raw materials including aluminium, copper, cobalt, nickel, manganese, graphite and lithium – all expensive materials which push up the overall price.
But don’t let that put you off. The creation of EV batteries keeps evolving as does supply of new car brands and car components, and while the batteries are becoming more powerful and durable, their costs have been decreasing over the past decade and are expected to drop even more in years to come. So, the purchase costs of electric cars continuing to fall and are expected to become more and more affordable for all!
Understanding the costs of charging your electric car before you buy or lease a shiny new EV are essential. While the charging costs depend on the electricity rates in your home or area, and the type of charging point you use, recharging your electric car is generally significantly cheaper than filling your tank with petrol or diesel.
But to make the best out of your electric car, you should consider installing a charger at home, because the charging costs are typically lower than using a public charge point especially if you can find a tariff that has been created for EVs at off-peak times.
Maintenance and repairs of electric cars
For most people, it’s cheaper to run an electric vehicle than a petrol or diesel car – with a recent study suggesting that owning an EV could save you an average of £700 a year.
That’s because an EV car’s battery, electronics and motor need very little maintenance, all electric cars are automatic too. Plus, there’s less fluids like engine oil, and wear and tear of your brakes is generally lower too.
Your electric car will need a service though like ICE cars including:
Fluids and coolant – Though your electric car does not need oil, it requires a routine check on these 3 fluids in EVs; coolant, brake fluid, and windshield washing fluid.
Brakes – Electric cars are clever, using ‘regenerative braking’, which means brake pad and disc wear is significantly reduced. But they will of course need replacing every now and again.
Tyres – EV’s are naturally going to be heavier than normal cars due to their batteries, so you’ll need to ensure your tyres are kept within legal limits.
Suspension – Like the tyres, EV car suspensions will be impacted by the weight of your vehicle, but they’ll be checked as part of your regular servicing.
And finally, insurance is another essential cost to think of when purchasing or leasing any car and it’s worth keeping in mind that some electric cars can be more expensive to insure compared to petrol or diesel vehicles.
The reasons behind higher insurance costs are simple – there are more expensive materials in electric cars, so the repairs can be lengthy and more expensive. Read our blog to find out more about why electric cars are more expensive to insure.
But if you’re leasing your EV through an electric car salary sacrifice scheme with work, then sometimes the insurance costs are included in your monthly fee, and because this comes out of your pay before tax, you’ll benefit from added tax relief.
Charging an electric car
Essentially, there are two common ways of charging an electric vehicle – home charging and the use of public charging points. Unlike refuelling a petrol or diesel car, the costs of charging an electric car depend on the charging methods and the applicable electricity rates.
Home charging is the most convenient and cost-efficient way to charge an electric car. You can technically plug your car directly into a 240-volt outlet (these are the standard plugs you have in your home). However, this type of charging is not always recommended as there could be safety implications with EV’s requiring a lot of power and the charging will be very slow. For those without the space to install a home charger, they should find out if there is on-street-charging or the proximity of other public chargers – you can do that here.
If a driver has access to a driveway or off road parking, its common to install a home- charger for faster charging. It’s worth noting that EV chargers draw a considerable amount of power, so make sure you get an appropriate survey before having anything installed.
Home charging costs can vary, depending on factors such as what type of EV you own and which electricity tariff you use – but it could be as little as 2p per mile.
Most people who have an electric charger installed at home and charge at night when tariffs are lower. Off-peak tariffs cost less because the demand for electricity is low and energy providers often have lower rates.
If you’re away from home or travel longer distances, using public charging points is a convenient way to recharge your electric car on the go. While the prices of some public charging points are based on the amount of electricity used, certain stations charge you for each minute of the charging process.
If you’re regularly using public charging points, it’s worth considering signing up for a subscription plan, as they sometimes provide discounted rates.
Finally, don’t forget that the UK offers a network of free EV charging points, usually located at supermarkets, as well as public and workplace car parks or hotels. While using free charging points is obviously the cheapest way to charge your electric car, it might not always be the most practical option as they may have access restrictions or lower charging speeds.
We’d recommend downloading an EV charge point map like Zapmap to plan the best option ahead of time! If you have your eye on a Tesla, you can use their trip planner to help plot range and chargers en-route for you.
Electric car cost per mile
Calculating the cost per mile for driving an electric car involves considering a number of factors, including electricity rates, vehicle efficiency, and maintenance expenses.
How to calculate the cost per mile of your electric car
Battery kWh Size / Your Cost Per kWh to charge = Cost per Range
Your Cost per Range / The Vehicle’s Stated Driving Range = EV Cost per Mile
Or, if your electric car shares its efficiency by kWh per mile:
Determine your EV’s efficiency in terms of kWh per mile. This figure can usually be found in your vehicle’s specifications or documents.
Check your electricity rates, typically measured in pence per kWh. In the UK, the average price of kWh sits around 24.5p/kWh.
And finally, multiply the kWh/mile efficiency by the electricity rate to determine the cost per mile. For example, if your vehicle consumes 0.3 kilowatts over one mile and your electricity costs 30p per kWh, the cost per mile would be £0.09.
Do electric cars need servicing?
One of the biggest advantages of electric cars is that they require much less maintenance. Electric cars operate on a battery rather than an internal combustion engine like petrol or diesel cars, so they have fewer moving parts.
But just like any vehicle, electric cars still need regular servicing and attention. For example, qualified car mechanics will connect your electric car to a diagnostic machine to detect any possible fault codes that might require some work.
Common routine maintenance of electric cars
Tyre rotation and alignment
Inspection of your car’s charging point and charging cables
Brake inspection
Coolant system check
The battery is a critical part of all electric cars, and while it shouldn’t require any professional attention when you purchase or lease a brand-new EV, there are a few simple tips to follow to maintain the battery’s health and prolong its life, including:
Minimising exposure to high temperatures
Avoiding the use of fast chargers every time you charge
So, what’s the conclusion? The costs of running an electric car can vary depending on the type of vehicle you choose, the electricity tariff you sign up to, and the mileage you make on average.
But the financial benefits of owning an EV could be big. There are potential tax incentives through an EV salary sacrifice scheme or an electric car business lease. And that’s on top of lower running costs and fewer maintenance requirements. All of these savings will add up, benefiting your budget while making a positive impact on the environment.
Discover electric cars
Discover electric cars that are available through our partner CBVC today.
For many of us, cost is one of the most important things when buying a car, whether it’s electric, petrol or diesel. If you’re just dipping your toe into the electric car market, you might have heard they’re expensive. Like any car, the cost depends on what you’re after. A swanky model with all the bells and whistles will cost you more than a dependable family car or a zippy little city number. It also depends on whether you choose hire purchase (HP), personal contract purchase (PCP), buy the car outright or maybe through your business.
How much will a lease set me back?
You can lease an electric car, like the Renault ZOE, from about £346.47 a month (February 2024) from our leasing partner CBVC. View our full range of electric cars to lease here with some available in as little as 30 days.
With both leasing and PCP, you pay a fixed monthly fee to rent the car. Both have limits on the number of miles you can drive – this would be agreed when you signed up to the agreement and you might have to pay for any damage excluded from the British Vehicle Rental and Leasing Association’s Fair Wear and Tear guidelines when you give the car back.
If you’re leasing, you’ll hand the car back at the end. With PCP you can buy the car by making a final payment, called a balloon payment. Alternatively, you can just hand the car back. It’s more flexible than a standard lease, but can cost more.
What if I want to buy one outright?
A Renault ZOE is available to buy from just under £30,000 (January 2024). For something a bit bigger, like a family hatchback, estate or SUV, you’d be looking at about £35,000 plus.
Would a second-hand electric car work for me?
If you just tend to potter about locally, to the shops, on the school run or to visit family nearby, you can pick up a used electric car like a 2018 Nissan Leaf on AutoTrader for under £10,000 (January 2024). You can drive it on longer journeys too but you may need to plan in charging stops due to the smaller batteries on older electric cars. To find public charge points on route to your destination, visit our public charge point map.
If you’re interested in finding out more about the total cost of owning an electric car compared to a petrol or diesel vehicle, have a look at our Total Cost of Ownership calculator, which compares a number of electric cars with their petrol and diesel equivalents.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
What are my options if I want to buy an electric car?
If you want your next car to be electric there are three ways to get hold of one: buy one outright, lease one, or lease one with the option of buying it when your contract ends.
Buying outright
When you buy an electric car outright you just pay whatever the price is and the car’s yours. No interest added and no ongoing payments to make. It’s very straightforward and you’ll usually find good warranties on offer from the seller, especially if you’re buying brand new.
Buying outright with a loan or finance
If you’ve taken out a loan to buy your car, you’ll probably pay interest to the lender. You’ll still pay up front and immediately be the proud owner.
Leasing
Leasing is another way of saying ‘rent’ or’ hire’. You usually pay a deposit and make payments every month until your contract runs out, then you hand the car back. This is a great option if you like changing your car quite often. You can enjoy driving it without having full responsibility for it. The downside is you’ll need to look after it carefully and hand it back in good condition.
Leasing with an option to buy
PCP stands for Personal Contract Purchase and this means you lease the car in the usual way but when your contract runs out, you either hand your car back or pay a final lump sum to buy it.
This is great if you want to try an electric car to see if you like it and keep your options open. It’s also good if you know you want to buy a car but paying the full showroom price up front is a bit of a stretch. It’s a way of spreading the cost.
And the government wants us all to move towards electric so there are other incentives too.
Through your work. Some companies offer a salary sacrifice scheme where they deduct the money for your electric car lease before they deduct your tax. So the cost of the lease is usually the same, but you save money on tax.
In Scotland you can get an interest-free loan of up to £28k on a new electric car and £20k on a used one. You buy your car and spread the cost without paying any interest.
If you’re running your own business the benefit in kind on electric cars is 2% until 2025 so they can be a cost-effective company car.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
Electric cars are a great option if you want to save on running costs or go greener. And you’ll be ahead of the game before the planned 2035 ban on the sale of new petrol and diesel cars. But how much do they cost to run?
Cost of running an electric car is cheaper than you think. Switching to an electric car isn’t just kinder to the environment, it’s easier on your pocket, too. For tax, maintenance and charging, the electric car wins every time, especially if you can charge at home. What’s more, leasing an electric car can save you money in the long run, as it does away with depreciation. Of course, you’ll need to choose a car that’s right for you and suits your monthly budget.
Charging costs
If you fill up a 50mpg petrol car at £1.60 a litre, that works out at roughly 15p for every mile you drive.
A family car like the electric Hyundai KONA can do about 3.8 miles p/kWh, so charging is much cheaper. And with thousands of public charging points spread across the country, charging while out and about is now easier than ever.
Charging at home (using an EV friendly off-peak rate of 12p/kWh) = 3p* a mile
Charging at home (using a standard day rate of 44p/kWh) = 11p* a mile
*Based on 4 miles per kWh and rounded to the nearest 1p. Prices correct as at December 2023
What about car maintenance costs?
Like most new cars, electric cars rarely break down. And because of regenerative braking, you won’t wear down brake pads as quickly as you would with a petrol or diesel car
Tyre wear is slightly higher than it is with petrol or diesel cars
Service costs are often cheaper for electric cars because they have fewer moving parts
And because there aren’t any emissions from a tailpipe, car tax (or vehicle excise duty) on electric cars is currently zero until 2025. However, this will be changing from April 2025, following the announcement in the Government’s Autumn Statement.
To find your dream electric car to lease, see our range of models – some available in as little as 30 days.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
A salary sacrifice arrangement might sound a bit scary – but it’s just a scheme where you swap part of your salary for a non-cash benefit from your employer.
And that’s why this scheme could be really useful in helping you afford an electric car lease.
How it salary sacrifice schemes works
First off, you need to know if your workplace has a salary sacrifice scheme.
The scheme works by you leasing a new electric car through your employer for a fixed time, like a year. It means you pay for the lease from your salary before income tax and National Insurance are taken off – so you’ll save the tax you’d have paid on the lease. For example, if the lease payment is £400 per month then you won’t pay tax on that £400.
By paying less tax, you’ll pay less overall than if you’d leased a car yourself away from work.
What could you save with a salary sacrifice scheme?
CBVC Vehicle Management state you could save up to 40% (depending on your tax bracket) by using a salary sacrifice scheme compared to sorting things yourself.
Even better, some salary sacrifice scheme packages include more than just the car lease. So you might also get maintenance, repairs, car tax, breakdown cover, insurance, a home charger and cables included too.
Sound good? This is a win-win situation where your employer gets help to hit their green targets and save on some of their taxes. While you get a new electric car which you might not have been able to afford otherwise, such as a Hyundai KONA or a Mercedes EQB.
If you’re interested in leasing a new electric car, most financial bods would recommend checking out a salary sacrifice scheme and then comparing it to other lease prices. Hopefully it’ll help you drive away the electric car you’ve always fancied.
Government grants to help to buy an electric vehicle
From the 14 June 2022, the following low-emission vehicles may be eligible for a plug-in grant: wheelchair accessible vehicles, mopeds, motorcycles, taxis, trucks and vans. The value of the grant will vary depending on the vehicle type. But the manufacturer takes that money off automatically, so you won’t find any saving on the showroom price.
In Scotland they’re also doing interest free loans – there’s a 6-year loan up to £28k for a new car and a 5-year loan, up to £20k, for a used one. You can find out more about these loans on the Energy Saving Trust’s website.
Government grants to install a electric car charge point
And, just like with the purchase schemes, things are slightly different in Scotland. You can apply in advance for a £250 grant in Scotland and get the discount reimbursed when you have a home charge point installed. There’s good news if you live in remote parts of Scotland too as you’ll get an extra £100 off.
If you don’t have your own drive, your local council can get 75% towards on-street public charge points. Some councils are all over this but yours might need a nudge. In Scotland, Transport Scotland covers the other 25% of the cost for on-street public charge points.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
Are electric cars still expensive? When electric cars first launched they were pricey. There were only a few on the market so those limited numbers and expensive batteries kept the cost up. But that’s all changing. Batteries are far cheaper and as more electric cars come on the market it’s driving the price down.
You’ve probably noticed more car manufacturers getting in on the electric car act. And along with early electric car pioneers like Tesla launching more affordable drives, it means more variety and the chance for you to find something that suits your budget.
The tech is getting better all the time and prices are gradually dropping. But new electric cars aren’t quite as cheap to buy as their petrol or diesel equivalents.
How much can I expect to pay for an electric car?
If you’re after a new electric car, a supermini like a Fiat 500e Hatchback 42kWh starts at £31,195.
Or, if you need something a bit bigger, a Hyundai KONA Electric 48kWh is available from £34,995.
And if you think a Tesla Model 3 is more your style, these start at £39,990.
If you don’t want to buy new, you could always look for a used electric car. You can pick up a second-hand 2011 Nissan LEAF for just over £6,000 on AutoTrader (May 2022).
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
There’s no simple yes or no to this. Just like insurance for petrol or diesel cars, it depends on where you live, how old you are, your driving history and the car you’ve chosen.
But right now, it does tend to cost slightly more to insure an electric car so get some quotes before you buy.
Why does it cost more?
Electric cars cost more because It’s partly to do with the tech in the car (which is also why they cost more to buy right now). The batteries in electric cars are expensive and cost a lot to fit if you need a new one. So if you have an accident and yours needs replacing, it can have a hefty price tag.
Now we’re certain batteries last years and years, car makers are building them into the cars. The downside is if something goes wrong you could end up replacing the whole car, as you can’t just pop the battery out. And unfortunately, it doesn’t have to be a major accident for the battery to get damaged, sometimes even air bags going off can wreck it.
If you’ve tried out an electric car, you’ll know they can be pretty speedy and that sometimes catches people out. For that reason, until everyone gets used to driving electric and the way it delivers instant acceleration, you’ll see higher insurance quotes.
On the plus side there are safety features in electric cars, like the tech in Teslas which reads the road and helps you avoid pedestrians and other obstacles.And all car makers, like Nissan and VW, are working on safety too, which in the longer term should bring insurance prices down.
Will car insurance for electric get cheaper?
As more and more electric cars come on the market it’ll drive the price of the cars and tech (like batteries) down. You should see the cost of repairs drop too. And that means insurance costs are likely to come down.
Is an electric car right for me?
Discover electric cars that are available through our partner CBVC today.
With plenty of gleaming brand-new models in the showrooms, you might wonder why you or your business should lease an electric vehicle instead of buying. It’s a good question: there’s nothing quite like the warm glow that comes with ownership. Or is there?
One good reason to take an electric car lease, not buy, is the capital outlay. People often perceive buying and leasing a car is similar to buying and renting a house. But that’s not really true. Purchasing a house is usually (but not always) a sound investment: purchasing a car may not be. And electric cars usually cost more than their petrol or diesel counterparts. Their high-capacity batteries and the technology that translates all that power into motion doesn’t come cheap. Even a mid-range car such as the Hyundai Kona 64kWh will cost you in the region of £33k (Sept 2023).
New cars typically depreciate quickly
Also average rates of depreciation are around 15-35% in the first year and considerably more after that. The instant you drive a new car off the forecourt it loses a hefty chunk of its value. And that’s a lot of money to lose when you come to resell it.
Electric car lease types
There are two main types of car lease – Personal Contract Hire (PCH) and Business Contract Hire (BCH). The first is where an individual enters into a lease agreement with a leasing company, such as CBVC – which works with ElectriX. The second is where a company enters into an agreement with a leasing company to provide its staff with cars. There’s also Personal Contract Purchase (PCP) that allows the individual to pay for a car over a fixed period of time, with the option of buying the car at the end of the term.
ElectriX is also offering salary sacrifice. This is where an employee has the monthly leasing fee deducted from their wages at source, from their gross salary. Even though the employee has to pay benefit-in-kind (BiK) tax, there are significant savings, as the employee’s overall tax bill and National Insurance payments will be lower. ElectriX now offers the most flexible salary sacrifice scheme on the market, with different levels of risk protection tailored to the employer’s needs.
Leasing a family-sized electric car like a MG4 Hatchback can cost from as little as £256.04 per month on PCH (as at February 2024). Or take a high-end electric car such as the Tesla Model Y – this can be leased from £425.80 per month (as at February 2024). And, after the contract period is up and no matter which model you’ve gone for, you hand it back with no cash payment at the end. You also have the option of getting another brand-new car of the same model, or an entirely different one, by which time technology will probably have moved on and the car may come with even more specs.
Other electric car lease benefits for businesses
Leasing electric cars and vans is a particularly attractive option for businesses. With BCH business owners can lease as many vehicles as they wish, with a range of benefits, including 50% VAT redemptions for cars and vans used for work and the employee’s own use, and 100% for commercial vehicles where the vehicle is used solely for work. There are also tax savings to be had on BiK tax.
Once all the necessary paperwork is completed, ElectriX and CBVC can get you behind the wheel of a brand-new car in as little as 30 days. That’s generally much quicker than buying one. If you want a factory order where you choose some of the specs like trim and interiors, it may take a little more time. Take a look at some of our stock offers here.
Leasing an electric car also means you’ll have more control over your finances, helping you to budget. You’ll have fixed monthly costs, with some contracts also covering maintenance. ElectriX can also sort out your insurance and home charging for you.