07 Sep Electric Cars
Could the tax incentives see you leading the way on electric vehicles?
Last week the UK government has announced that they are bringing forward the ban on selling new petrol, diesel or hybrid cars from 2040 to 2035 (or earlier if possible) to help achieve their carbon emissions target by 2050.
There have been tax incentives associated with electric cars for a number of years but to help encourage more consumers to move to electric cars, from the 6th April 2020 those incentives became even more enticing. For the 2020/21 year the benefit in kind rate on an electric car is 0% only rising to 1% in 2021 and 2% in 2022. This is compared to a benefit in kind rate of 29% for an average newly registered petrol car.
In addition to the favourable benefit in kind rates, unlike petrol and diesel cars, electric cars qualify for 100% first year allowances meaning that the business receives the full cost of the vehicle as a deduction from their taxable profits in the year of purchase.
All of this and no road tax to pay on the vehicle either!
Businesses have been moving away from running cars through limited companies because of the high benefit in kind charges and reducing levels of tax relief but the changes implemented by the government have been significant enough to put the issue of company cars back on the table. Like any new technology take up is slow and there are still reservations over cost, reliability and range but with huge investment into the industry and the government’s commitment to reducing carbon emissions, improvements will continue to be made. If the tax incentives are making you think twice about purchasing an electric car for use in your business then get in touch with us and we can talk you through the tax savings for your particular circumstances.