Are you looking to buy an electric car? You may wish to consider buying an electric vehicle through your business.
What are the tax advantages of buying an electric car through the business?
Buying a fully electric brand-new car will allow you to get 100% capital allowances on the purchase of the car in your tax return, saving you 19% Corporation Tax in the first year of purchase on the full value of the car. Beware though when you sell the car you will need to pay Corporation Tax on the proceeds of the sale.
How much will it cost me?
If you use a company car privately you will need to pay tax on the perceived “Benefit-in-Kind”. Thankfully fully electric cars have a very low rate of benefit in kind, currently 2% of the vehicle cost.
For example, a Tesla Model X with a list price of £90,000 would have a benefit in kind of £1,800 to declare on your annual tax return. This will cost the business £248 in Class 1A National Insurance and will cost you £360 in income tax for a basic rate taxpayer and £720 for a higher rate taxpayer.
Who pays for the running costs?
All costs relating to the running of your car can be put through the business including insurance, servicing & repairs. You can even claim 5 pence per mile for business miles if you charge it from home.
Can I lease an Electric Vehicle through my business?
Yes, the expense will go through your profit & loss account and will be fully deductible for corporation tax. However, you will pay VAT on top of the lease cost and only 50% of the VAT is recoverable if you are VAT registered.
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I am a qualified Chartered Management Accountant with 15 years post qualification experience and 30 years’ experience in finance and business management based in Ashford Hill. www.woodpeckerconsultancy.com