Our team is a huge fan of electric cars, and Tesla has four sexy models available now, making it a great option for business owners and employees who want to ditch their petrol or diesel cars.
With incentives such as the Plug-in Car Grant and Plug-in Van Grant initially boosting electric vehicle sales, the government is also offering additional incentives to help more drivers adopt electric vehicles. People are becoming more and more aware of the many benefits of electric cars as they become increasingly popular.
You can’t go wrong with an electric car for your company – you’ll save money, help the environment, and have a lot of fun driving it!
How you will benefit if your company buys electric cars
- Electric cars are environmentally friendly, have lower running costs, and save you both personal and corporate taxes.
- No London Congestion Charge. Drivers who find themselves requiring access to the London Congestion Charge Zone in an electric vehicle can save £15.00 per day.
- ULEZ Charge: Drivers who find themselves requiring access to the London Ultra Low Emission Zone in an electric vehicle can save £12.50 per day
- No Road Tax.
- If your company is VAT-registered, you can potentially reclaim VAT on lease payments for your electric vehicle. You can claim 100% if the car is for 100% business use only and not available for private use. 50% VAT is reclaimable if used for personal use.
- An outright purchase or hire purchase of a brand new fully electric car will qualify for Enhanced Capital Allowances.
- If the company purchases outright, the first-year allowance allows them to deduct the full purchase price from profits before taxes. This is in addition to the normal Annual Investment Allowance.
- No Fuel Benefit to pay if it is a fully electric car.
- Fuel costs can be as low as 3 pence per mile. Based on an annual mileage of 10,000 per annum, switching to electric could therefore save around £800 a year in fuel bills.
- The installation of a charge point at work also qualifies for the first-year allowance and you can claim tax relief of 100% in the year these costs were incurred.
- If the electric car is purchased through a lease and the Co2 is under the threshold of 50g/km, you can deduct the full monthly lease cost from the company’s profit and loss account statement.
- National Insurance: As Class 1 National Insurance Contributions (NICs) for company cars are based on official CO2 figures, employers who provide low emissions electric and plug-in hybrid vehicles to employees pay less NICs.
- Plug-in Car and Van Grant: The Plug-In Car and Van Grants subsidise the purchase of eligible cars by up to £2,500 for EVs costing less than £35,000; vans recieve a grant for 35% of the purchase price, up to £3,000 for small vans and £6,000 for large vans.
Find out what the impact is before you buy an electric car
Speak to us to calculate the tax impact should you consider buying or leasing an electric car through your company. Depending on your personal circumstances, the amount of tax you’ll save will vary, but hopefully the above provides a good place to start. We will be able to provide you with professional advice on:
- A comparison of hire purchase, finance lease, and operating lease options so you can decide what is best for you
- Your corporation tax savings
- Your VAT reclaim
- Benefit in Kind
- Personal tax liability
- National insurance contributions implications for the company
- Taking into account whether you pay basic or higher rate income taxes when calculating any calculations
