The Business Exchange Swindon & Wiltshire Edition 61: June/July 2022 - Page 16


No one can afford to ignore climate issues but there is help available for businesses heeding the green message

Everything you need to know when developing your company ’ s electric vehicle policy .
Richardson Swift Tax Director Jon Miles addresses the main concerns around e-vehicles and how businesses can benefit from introducing them .

What are the tax reliefs if my business buys an electric car ?

If your business buys the car outright or using finance ( e . g . Hire Purchase ), the business will qualify for a 100 per cent first year capital allowance . i . e ., the business can claim the full cost of the vehicle in the first year against taxable profits . This provides a lucrative cash flow benefit to the business that is not available for other cars . These only get a 6 per cent – 18 per cent write down allowance each year depending on the Co2 emissions . To qualify for the 100 per cent capital allowance , the car must be brand new or its only prior use was that of a demonstration vehicle . For a second-hand electric car , these will only qualify for the standard 18 per cent write down allowance each year . In relation to electric hybrid cars , be aware the 100 per cent first year capital allowance is no longer available for these . For hybrid cars these will only qualify for the standard 6 per cent – 18 per cent write down allowance based upon the Co2 emissions figure , even if the car can operate for a distance on electric only power . In relation to the previously announced super deduction for companies , electric cars unfortunately do not qualify for the super deduction .

What is the company car benefit in kind P11D tax charge ?

If a business provides an electric car to an employee or director that is available for personal use , the taxable benefit on the relevant employees will be based upon the list price when new multiplied by 1 per cent for the current year to 5 April 2022 . For the year to 5 April 2023 this percentage increases to 2 per cent . See below :
For example , a Tesla Model 3 with a list price of £ 40,990 would generate the following tax liabilities :
Although the benefit is likely to be lower than a standard petrol / diesel car , it will not be as low as an electric only car . If you are considering acquiring a hybrid car and would like to know the personal tax cost , please let us know what model you have in mind , and we can give you an idea of the tax charge .
" A tax efficient way of extracting profits from your business ..."
Jon Miles , Tax Director
At Richardson Swift we specialise in advising owner managers and small to medium-sized businesses on how to use current tax law to enhance their operations and maximise profit right through the company ' s lifecycle . From compliance to outsourced financial director services , our expert team prides itself on getting to know our clients so we can not only meet their needs but anticipate them .
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