This is the first of a two part series of blogs on the topic of wealth creation. In this first blog I will be looking at how wealth is perceived in society and how you can measure your own wealth.
What are the Tax Implications of Buying an Electric Van?
The Government has introduced a number of tax incentives and measures to encourage more people to use zero emission vehicles, and there are rumours that the planned ban on the sale of new diesel and petrol vehicles, as well as hybrids, could start as early as 2032.
Much has been written about the tax benefits of driving an electric car, but not so much is known about the tax implications of using a company electric van. To help we have listed below the tax implications of purchasing an electric van via your company.
Capital Allowances
Businesses can deduct the full value of an electric van against profits in the year of purchase by way of a First year Allowance which is available for expenditure on new and unused electric vans. If however you are looking to buy a used electric van, then it should be eligible for the Annual Investment Allowance, also allowing you to write off the whole cost of the van against profits in the year of purchase. The current AIA stands at £1 million of qualifying expenditure per year.
Benefits in kind – van benefit
Unlike electric cars for which the benefit in kind was reduced to 0% for the tax year 2020-21, the benefit in kind rate for the electric vans is actually increasing year on year until it matches the tax rate for regular vans – projected for 2023. For the tax year 2020-21 you would have to pay tax personally on 80% of the standard van benefit charge, i.e. £2,792. For a basic rate taxpayer that is equivalent to tax of £558 whereas a higher rate taxpayer would pay £1,116.
The percentage is set to increase to 90% for the tax year 2021-22 and to match the standard van benefit rate for the tax year 2022-23.
Benefits in kind – fuel
However, it is not all doom and gloom with electric vans. The annual road tax and Van Fuel Benefit Charge for electric vans should stay at £0, as electricity is not considered a fuel.
The content in this blog is correct as at 25 March 2020 See terms and conditions.