The tax perks for electric vehicles (EV) are outstanding, especially for business owners.
For business owners who drive a car and pay higher rate personal tax, electric company cars may be particularly attractive. With minimal ‘benefit-in-kind’ tax (currently 0%, rising to 1% in 2021/22 and 2% in 2022/23), the effective cost of a vehicle is surprisingly low – whether acquired outright or leased.
If the car is bought by the company, new zero-emission cars qualify for a 100 per cent first-year allowances, which means company owners can write off the whole cost of the car against their profits in year one - reducing their corporation tax bill, too. If leased, if an individual’s salary is reduced by the effective cost of the lease, there is a circa 50% tax advantage. That creates its own problem… the choice between saving the cash, or buying twice the car!
If that’s not enough, electric cars cost about half as much to run, with zero road tax. Charging the car at the office is not a taxable benefit either.
To consider EVs in the context of your business, please contact our tax team on 01788 539000 or email [email protected].