Time for a Company Electric Car?

9 October 2019
Jan Friend
Accounting & Compliance, Building a Business, Reducing Tax

If you have been thinking about buying an electric or hybrid car and you have a company then now just might be the time to start your research.

The government has announced that there will be a zero P11D benefit for the drivers of electric cars from 2020/21 (ie from 6th April 2020). This is instead of the 2% scale charge that was originally included in Finance Act 2017 to apply for 2020/21. The legislation for the change will be included in Finance Bill 2020 and it is proposed that the benefit will be 1% of list price in 2021/2 and then 2% in 2022/3.

The zero taxable benefit will also apply to hybrid cars emitting no more than 50 grams of CO2 per kilometre with a range using its electric motor of at least 130 miles, but only for cars first registered on or after 6 April 2020. For those registered before 6 April 2020 the scale charge will be 2%. At the time of writing this blog there appears to be very few qualifying vehicles in the top band but we expect this to change over the coming months as more manufacturers produce hybrid cars with longer battery ranges.

Rather confusingly there will therefore be two different sets of scale charges from 2020/21, one set relating to those registered before 6 April 2020 and a new lower set of rates for those registered on or after 6 April 2020.

If you are considering buying an electric car for yourself as a company director or for your employees we advise you to wait until 6 April 2020 as the P11D scale charge for electric cars is currently 16% of original list price for 2019/20.

An added bonus for your business is that you can claim 100% first year capital allowances on the cost of the car, provided it is new and unused. That means the whole of the cost can be claimed against profits in the first year it’s bought to reduce tax. Compare that with the usual rate of claim of 18% or 6% for cars with CO2 emissions over 110g/km!

For more information on what cars qualify for the generous tax reliefs see our previous blog ‘100% Tax Relief on Tesla Model X Continues’

If you’d like more advice about electric cars contact me on 01634 731390 or at Jan@friendandgrant.co.uk

Similar articles

person holding clapper board
12 November 2019

Keep Details of Your Director’s Loan Account and Keep it in Credit!

In a recent Tax Tribunal case the judge agreed with HMRC that a detailed breakdown of director loan account transactions is required, including dates. The significance is that where the loan account is overdrawn (debit balance) there may be a possible P11D benefit on the director and also a tax charge on the company.

snowflake on Christmas tree
5 November 2019

Tax Efficient Charitable Giving at Christmas

With Christmas coming we thought it would be helpful to summarise all the key tax benefits you can use over the festive season to ensure you have a very tax efficient Christmas!

Christmas gifts
5 November 2019

Have a Very Tax Efficient Christmas!

With Christmas coming we thought it would be helpful to summarise all the key tax benefits you can use over the festive season to ensure you have a very tax efficient Christmas!

Our 3 step risk-free guarantee puts your mind at rest and keeps us on our toes!

FIND OUT MORE
Bryant House - Friend and Grant Chartered Acocuntants and Tax Advisors

Book Your Discovery Meeting

Are you hungry for success? If you run a small to medium size business and you want to grow your sales, increase profitability and pay less tax then you have come to the right place.