100% Electric Company Cars

In simple terms, buying an 100% electric car through the company has the following tax advantages:
  1. The full purchase amount can be written off against tax:
    1. Only if the car is bought by the company and is new (so, not leased or second hand).
      1. Financed purchases are OK, so long as the company owns the vehicle on their balance sheet.
    2. If the car cost £50,000 – this would be written off against tax, saving approx. £9,500
    3. Although, if the car is sold at a later date, tax on the sale value will be due
    4. It’s unclear if electric cars would benefit from the enhanced capital allowances introduced in April – but this could be investigated if this was an option to you
  2. Benefit in Kind charge is 1% for 2021/22, 2% for 2022/23 and so on
    1. On a £50,000 car this would be £500
    2. Tax charge would therefore be:
      1. Basic rate tax rate: £100
      2. Higher rate tax rate: £200
A lease would have the same BIK benefits, but you don’t get the first year allowance tax write off.

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