What Are the Benefits Of Leasing An Electric Car?

What Are the Benefits Of Leasing An Electric Car?

The demand for electric vehicles and hybrids is booming and by 2020/21 there is expected to be 1 million electric car users on UK roads, so what are the benefits of leasing an electric car over buying one outright?

According to data compiled by the Society of Motor Manufacturers and Traders (SMMT), registrations in July, 2019 for hybrid electric cars increased by a considerable 43.2%, with 7,758 of these being driven on UK roads. As for battery electric vehicles, they’ve increased by a significant 158.1%, which made up for 1.4% of the total market sales, the largest monthly market share on record to date. Sales for diesel vehicles decreased for the 28th month, down -22%, while petrol cars stayed the same.

With the UK government's plans to ban petrol, diesel and many hybrid cars by 2040, EVs could well soon be the main cars to dominate our roads in the near future.

Here is our guide to everything you should know about electric car grants, incentives, tax benefits and benefits of leasing one …

Electric car grants, incentives and tax


EVs - including cars and vans - come available with the following government funding options;

Plug-in car grants

A government plug-in car grant towards the purchase of brand new EVs is now worth £3,500 after being reduced from £4,500 in 2018. Plug-in hybrid cars do qualify for the same grant but they must emit CO2 emissions under 50g/km and be capable of travelling at least 70 miles on electric charge alone. You cannot purchase a used car with this grant but buyers are eligible for the Electric Vehicle Homecharge Scheme (EVHS) grant, which pays up to 75% (£500) of the cost of installing EV home charging points. EVHS is also available for new car buyers.

Examples of current Cars that qualify include:

  • Audi e-tron
  • BMW i3 and i3s
  • BYD e6
  • Citroen Zero
  • Hyundai IONIQ Electric
  • Hyundai KONA Electric
  • Hyundai NEXO
  • Jaguar I-Pace
  • Kia e-Niro
  • Kia Soul EV
  • Mercedes-Benz B-Class Electric Drive
  • Mercedes-Benz eVito Tourer


  • Nissan e-NV200 (5-seater and 7-seater)
  • Nissan LEAF
  • Peugeot iON
  • Renault ZOE
  • Smart EQ fortwo
  • Smart EQ forfour
  • Tesla Model S
  • Tesla Model 3
  • Toyota Mirai
  • Volkswagen e-up!
  • Volkswagen e-Golf

View our Green/Eco car leasing prices

Plug-in van grants

For vans, buyers are allowed a grant of up to a maximum of £8000, which pays for 20% of these vehicles and is more than double the amount of the plug-in car grant scheme. They must have CO2 emissions of less than 75g/km and can travel at least 16km (10 miles) without any emissions at all.

Examples of current vans that qualify include:

  • BD Auto eTraffic
  • BD Auto eDucato (3.5 tonnes)
  • Citroen Berlingo
  • Mercedes-Benz eVito
  • Mitsubishi Outlander Commercial
  • Nissan e-NV200 (cargo van)


  • Peugeot ePartner
  • Renault Kangoo ZE
  • Renault Master ZE
  • LDV EV80 van; and
  • LDV EV80 chassis cab

View our van car leasing prices

Road tax for electric cars

EVs costing less than £40,000 are free from paying road tax. Owners of hybrids or plug-in hybrids are no longer exempt from paying road tax, instead paying a standard rate of £130 after the first year. If your car has a list price of over £40,000, you’ll have to pay a £310 surcharge for the first five years. This only applies to cars in or after April 2017.

Used cars that were registered before April 2017 will have to pay the old VED rates. If you opt for a car registered between March 2001 and 31 March 2017, which emits CO2 less than 100g/km, then you won’t have to be concerned about paying any road tax.

Electric company car tax

EVs have the lowest Benefit-in-kind (BiK) company car tax, which can help save company car drivers save thousands per year compared with a conventional petrol or diesel car.

Here’s an example comparing tax costs between electric vs diesel cars;

 Nissan Leaf N-Connecta 40kWh Electric Auto  VW Golf 1,6 TDI Match DSG Auto 
Personal Tax Band   40% Tax  40% Tax
 Fuel type  Electric  Diesel
 OTR Price  £27,890  £24,210
 P11 Value  £31,335  £23,990
 Real World Range MPG  188 miles  50mpg
 Official Published Range  235 miles  72mpg
 On Board charger  6.6 kW  n/a
 Official CO2  0 g/km  104 g/km
 VED 1st Yr  £0  £165
 VED Annual  £0  £140
 Total VED (over 3 years)  £0  £445
 BIK Yr 1  £1,629  £2,399
 BIK Yr 2  £2,005  £2686
 BIK Yr 3  £251  £2,783
 Total over 3 yrs  £3,885  £7,868
 CAZ ULEZ Charge (e.g. London 5 days / 3 yrs)  £0  £0
 C Charge 3 yrs (5 days)  £0  £8,970
 Total Tax Cost over 3 yrs  £3,885  £17,283
 Total Tax Saving vs ICE  £13,398  

If your vehicle is non-compliant it could add an extra £9,750 to the above calculation.

For more examples, you can use the Zap Map Journey Cost Calculator to find out what savings you could make from switching from a conventional petrol or diesel to an EV. In addition, the government has recently said that company car drivers choosing a pure electric vehicle will pay no benefit-in-kind (BIK) tax in 2020/21, which will likely prove to be a massive benefit for companies during the next financial year.

Read more: Company car tax explained!

Other Electric car benefits


For people who live and work in the capital that drive any car that emits less than 75 g/km of CO2 does not have to pay the daily London Congestion Charge (if registered correctly), plus many London boroughs offer free or discounted parking for EV’s too. A lot of manufacturers also offer scrappage discounts for anybody who exchanges their petrol or diesel car for an EV.

What are the HMRC mileage rates for electric cars?

Since September 01, 2018, the official mileage rate for EVs is 4 pence per mile. HMRC calls this rate the Advisory Electricity Rate (AER). This new rate, also known as the Advisory Fuel Rates (AFRs), can be used to reimburse company car drivers for business fuel. They can be used if employees are required to repay the cost of fuel used for personal travel. HMRC deems the fuel used during these trips to be exempt from national insurance and tax.

For more information on AFRs go to: gov.co.uk

Benefits of leasing an electric car

Apart from the obvious environmental benefits, leasing an EV can be a more attractive option than buying one outright. The top 4 benefits of leasing over buying an EV include;

  • Cost - Most modern EVs in the UK market can be expensive to buy outright, therefore lease-rates can be more appealing. With leasing, you can drive away with a brand new, high-tech EV for a reasonable deposit and affordable monthly cost, instead of having to wait years just to afford to buy one outright. Add to this the fact that with leasing you have the option of upgrading your vehicle every 3 years or so. EVs with low kW batteries such as the Renault Twizy and the Peugeot iOn are examples of affordable lease deals.
  • Lower risk of vehicle depreciation compared to petrol and diesel cars - It is no secret that internal combustion engine cars depreciate faster. As soon as you drive away with your new car it immediately has a lower resale value. And with the latest EV tech gaining widespread trust, the demand for EVs and plug-in hybrids is growing in popularity, which means depreciation is slowing on such vehicles.
  • Maintenance - As mentioned earlier in this blog, EVs are easier to run and maintain. They have fewer moving parts than a conventional car and because EVs use ‘regenerative braking’, the brake pads can last longer and are a lot more durable, resulting in further costs saved. You also have the option of including a maintenance package on your lease agreement for an additional monthly cost. In a nutshell, leasing is more like a subscription because there are no unplanned expenses throughout your leasing agreement.
  • Improving technology - EV engines and batteries are also developing and rapidly going down in price, meaning more and more manufacturers are bringing out new, more efficient models every 3 to 4 months. Improving technology also means that when you reach your renewal you will be getting the latest technology available each time. According to Chargepoint, an EV charging infrastructure company, the range on EV batteries has improved by around 5 to 10 miles per year.

If you would like to discuss electric car or van leasing options with an Account Manager - give us a call on 01273 433480 or request a callback today.

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