Capital Allowances
Where an electric car is purchased either outright or via a Hire Purchase agreement, the capital allowances available to the company are much higher than those usually attributable to cars.
Brand new pure electric cars will usually qualify for First Year allowances (FYA). FYAs give 100% tax relief in the year of purchase provided the CO2 emissions are 0g/km.
Therefore, buying an electric car through your company may significantly reduce its corporation tax liability for the year.
Employment Benefit
As with any car provided to employees, the provision of an electric car will give rise to a benefit in kind.
The calculation of the benefit in kind for cars is based on the list price of the car and the CO2 emissions. Where an electric car is provided to employees, the relevant percentage is much lower than petrol or diesel cars which is perhaps more marked when you consider the relevant percentage for high CO2 emission cars can currently be up to 37%.
Car benefits are reported via a form P11D should be filed with HMRC by 6 July following the end of the tax year in which the benefit arises. The company will be liable to Class 1A National Insurance at the revised rate of 13.8% on the benefit and the employee will be liable to income tax on the benefit at their marginal rate.
Installing electric charging points at the office or at the employee’s home should not give rise to a taxable benefit in kind.
Please do not hesitate to contact us on 01633 810081 should you wish to discuss this further.
