Moore Thompson outline the benefits of having electric cars for your business
Many businesses and individuals are concerned about the impact of climate change on the world, which is why the number of new electric and ultra-low-emission cars is on the rise, writes Matt Upex, of accountancy firm Moore Thompson.
With the Government’s commitment to stop the sale of new petrol and diesel cars from 2030 and incredible advancements in electric car technology, the country appears to be on the edge of a green revolution.
While many electric car owners choose their vehicle for their eco-credentials, using an electric car as your next company vehicle could also significantly reduce the amount of tax that you pay.
Company cars producing zero CO2 emissions attract a one per cent Benefit in Kind (BiK) tax rate for the 2021/22 tax year (rising to 2 per cent in 2022/23), meaning businesses pay the lowest available rate of car tax on a pure electric car.
In addition to the one per cent BiK tax charge, Class 1A National Insurance (NI) is normally payable by a business providing a vehicle.
The Class 1A NI rate is currently 13.8per cent, charged against the taxable BiK each year. Fully electric cars are also exempt from the Vehicle Excise Duty (VED) ‘expensive car supplement’.
This duty still applies to petrol, diesel and hybrid vehicles costing over £40,000 that are subject to an additional £335 VED charge.
Purchasers of electric cars can also utilise the plug-in grant which can reduce the purchase price by up to £2,500.
Where a business installs a charging point before 2023, it can also claim a 100 per cent first-year tax allowances for the costs against its taxable profits.
There is no taxable benefit charged on employees, who use the charge point owned by the business, subject to other minor conditions.
There are also schemes available to support funding towards the charging point for the car where it is at a person’s home address.
There are many tax and cost advantages to owning an electric vehicle, but it pays to seek advice from a specialist before making a purchase to make sure you maximise the benefits on offer to you and your company. To find out how we can help, speak to our team at Moore Thompson today.