We are currently receiving so many enquiries from clients about the merits of providing electric vehicles as “company cars”, that Tax Tuesday feels bound to recap on the irresistible tax incentives involved.
Here are the simple abbreviated tax facts.
Taxation of directors and employees – electric vehicles
From 6 April 2020 the taxable benefit in kind associated with an electric vehicle provided to an officer or employee, by their employer, for use including private use, will be ZERO per cent of the vehicle’s list price.
(This also means ZERO Class 1A National Insurance for the employer.)
On 6 April 2021 the benefit in kind will increase to 1% of list price and from 6 April 2022 to 2% of list price.
These rates of taxable benefit send a very powerful message from government. They compare extraordinarily well to the full table of car benefits which runs up to nearly 40% of list price, depending upon CO2 emissions.
Taxation of directors and employees – electricity
Electricity is not “fuel” for car taxation purposes and electric company vehicle users are subject to ZERO tax on the costs of recharging borne by their employer.
(Even employees allowed to recharge their own electric vehicles at their place of work are not subject to a tax charge.)
Taxation of employers – capital allowances
Businesses qualify for 100% first year capital allowances on cars with very low CO2 emissions. Electric vehicles involve no emissions, of course, and therefore qualify for this immediate, unrestricted relief.
(There is no road fund licence payable for zero emission cars either.)
It is no wonder that some manufacturers are reporting doubling, if not tripling, of orders for vehicles powered by electricity. Harold Sharp will be pleased to work out for you, or your staff, how much tax savings might be achieved from choosing electric vehicles over comparative value petrol or diesel vehicles, for forthcoming company car provision purposes. You can expect that saving to be significant over the life of the car.
If you would like to know more please get in touch with your relationship principal or by email here to Tax Partner, Chris Barrington.