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

ADVERTISING FEATURE

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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