With changes in the tax rules we look at the electric vehicle why you should have one.
The take up of electric vehicles has so far been quite slow and with everyone’s awareness of climate change and the phasing out of new petrol and diesel vehicles in 2035, the government has offered big tax incentives to encourage user takeup and therefore manufacturers to develop them further.
The biggest incentives are for brand new electric vehicles (EVs) and for the company and individual are as follows:
- Capital allowances from company
- 100% allowance for new cars – this is effectively treated as the full cost going against profits saving 19% corporation tax
- 18% reducing balance for 2nd hand car – ie a lesser sum over a number of years
- Benefit in kind – this is the big benefit!
- 0% of list price for 2020/21 – ie no cost for you as an employee
- 1% for 2021/22
- 2% for 2022/23
So buying new is more beneficial than 2nd hand, the other option would be a lease so you effectively rent it for 3 years which would mean you get the cost of the rentals set against corporation tax each year. Evision https://www.evrent.co.uk/ run some seminars with test drives
and were very knowledgeable, there is the option to swap cars mid-lease, and of course things are moving on with battery technology so that does put into question whether you want to buy one!
Hybrids are less beneficial now, the benefit in kind will be based on the range they can do on battery alone for next year (and not much different to a conventional car cost if the range is small). Capital allowances are 18% for 2nd hand and anything with CO2 of more than 50g. New hybrids with less than 50g do attract the 100% allowances.
If you are considering a change to an EV now is probably the best time from a tax perspective. However every business and personal situation is different so you should therefore seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”