Do you think that all 100% tax relief cars are electrics with the performance of an old fashioned milk float?
Think again. This one does 0 to 62MPH in 2.9 seconds!
There’s over 130 makes and models of cars which qualify for 100% tax relief; some amazing vehicles are included on the list:
BMW I8, Porsche Cayenne,, Tesla Models S and X, certain BMW 3 & 7 series and Mercedes S & C classes.
We’ve highlight the Tesla Model X, because two of our clients have recently bought them outright. With a list price of £80,000 this performance beast has versions which can hit a maximum speed of 155 mph and a staggering 0 to 62 in 2.9 seconds.
Amazingly the tax man continues to allow businesses to claim 100% allowances if they buy the vehicles. So a company buying a £80,000 Tesla will have its profit reduced by £80,000 saving £15,200 in tax! Beware, there’s a sting in the tail. When you sell the vehicle the proceeds may result in the whole amount being added to your profit and taxed at 19% for corporates – a good excuse to then go and buy another tax efficient car!
Currently 100% capital allowances are available when a business buys a motor car with CO2 emissions of no more than 50 grams per kilometre and according to HMRC’s Agent Updates this will continue until 2025.
Normally motor cars only receive a writing down allowance at the rate of 18% or 6% on a reducing balance basis, which means it can take several years to get tax relief for the cost of the vehicle. The cost of a low CO2 car can be written off immediately against business profits.
Note: The car must be new and bought either for cash or on hire purchase to get the 100% tax relief.
Where the car is provided for use by a director or employee of the business then there would be a taxable Benefit in Kind on the individual based on the CO2 emissions and original list price of the car.
If you are interested in buying a qualifying car, you can see what’s available at www.comcar.co.uk Go to car chooser, enter your criteria and, most importantly for corporation tax relief, select cars up to 50.0 gms. If you are a client of Friend & Grant we’re happy to help, call us or email Jan Friend.
The content in this blog was updated and is correct as at 24 January 2021. See terms and conditions.