I was talking to Vikki the other day and she said she remembers seeing one of the first electric cars on Blue Peter and laughing at it for the following reasons:
A) what it looked like
B) the fact it only went 10 miles!!!
Needless to say, unlike her yearning for a gold Blue Peter badge, we have moved on and the electric car is becoming increasingly popular. Up to the end of August 2019 there were approximately 227,000 electric cars registered in the UK.
So, with the government wanting to encourage the use of low or zero CO2 omission vehicles, and all new cars from 2030 must be electric, how are they incentivising this?
New pure electric cars qualify for the first-year allowance, meaning 100% of the cost of the vehicle purchased can be offset against the profits of the company.
VAT can also be claimed on cars that are for business use only.
The percentage at which a benefit in kind is taxed is based on the CO2 omissions of a vehicle. For the 21/22 tax year the benefit in kind rate is just 1%, from April 2022 this will be increased to 2% for pure electric. (Don’t forget you still need to either file a P11D each year or add to payrolling your benefits!)
If the vehicle is charged at work, there is no taxable benefit and moreover 100% of the first-year allowance is available for the cost of installing a charging point at the workplace.
If the employee charges their vehicle from their home power supply, then there is a mileage allowance available at 4p per mile.
The charging points can also be put through your business, and until April 2022 there is also a grant available towards the cost of the charging points. However, knowing our government this could be extended…..
With the first-year allowances and the benefit in kind percentages available this may be the perfect time to ditch the petrol stations and embrace electric.
To learn more about leasing v purchasing your new car check out our blog Should I lease or purchase my new company vehicle?
Wouldn’t it be wonderful to start saving money as well as saving the planet?
And while were talking about savings – a little Brucey bonus – you can also offer electric cars to your employees, through the business and save you and them money too? A great saving for you (money and the planet), but also a great perk to offer your employees.
You lease the vehicle of their choice through a leasing company (we can recommend if you would like a contact!), and you use salary sacrafice for the employee to ‘pay’ you the leasing amount each month. With salary sacrafice the leasing amount is taken out pre-tax and NI, so the employee will pay less tax than if they went and got a car from their net wages, and you as the employer have the lease cost covered – but also pay less employers NI on the reduced gross salary. Win Win!
Talk to us about purchasing an electric car and the benefits for your specific circumstances – drop us an email on hello@pinkpigfinancials.co.uk
