Tag: Cars

A Summary of Tax, Savings and Benefits of Electric Cars

What is the plug-in grant?

The plug-in grant has been around for several years as an incentive to purchase electric vehicles to curb climate change. The grant has been modified many times, but it currently offers £2,500 off of eligible low-emission cars and up to £16,000 for larger vehicles.

You do not need to apply for the grant. The car dealer will include the grant in the vehicle’s price if it is eligible.

  • Cars: CO2 emissions of less than 50g/km and can travel at least 112km with zero emissions. The car must cost less than £35,000 and be on the list of government approved vehicles. The grant will pay for 35% of the car price up to £2,500.

Grants for vehicle charging points

In addition to the plug-in grant, you can also receive up to £350 towards the cost of a vehicle charging point. The Electric Vehicle Homecharge Scheme (EVHS) provides up to 75% of the installation cost on domestic properties in the UK.

There is also the Workplace Charging Scheme (WCS) which is a voucher based scheme that provides support to businesses who install vehicle charging points.

Both grants need to be applied for from the government’s website.

HMRC Advisory Fuel Rate

The advisory electricity rate for fully electric cars is 4p per mile.

So you can claim 4p per mile for business miles in an electric car.

Advisory fuel rates – GOV.UK (www.gov.uk)

100% Capital Allowances

Businesses of all sizes can claim 100% FYAs on capital expenditure on a car (CA23153) provided that:

  • the car is ‘unused and not second hand’, and is first registered on or after 17 April 2002;
  • it is an electric car or a car with qualifying CO2 emissions of not more than a specified amount;
  • the expenditure is incurred between 17 April 2002 and 31 March 2025; and
  • the expenditure is not excluded by the general FYA exclusions, see CA23110.

Second Hand zero emission cars are added to the main rate pool and written down at 18%

Benefit in Kind

Cars first registered from 6 April 2020 (WLTP)

CO2 emissions figureElectric range figure2020–212021-22
0N/A0%1%
1–50130 or more0%1%
1–5070–1293%4%
1–5040–696%7%
1–5030–3910%11%
1–50Less than 3012%13%

steve@bicknells.net

It’s a Pool Car isn’t it?

Black Elegant Vintage Car

Yet again, we have another case on Pool Cars which could have been prevented had the right procedures been put in place.

The Case was decided in May 2015 and involved Mark and Trudie Holmes and their company KMS Logistics (UK) Ltd. The company owned 7 prestige cars which were used assist in maintaining and attracting clients.

There was no prohibition (not even a verbal one) on the private use of the vehicles, mileage logs showed that the cars were mainly used by Mr & Mrs Holmes. Until 2003/4 they had been declared as a benefit in kind but then the stopped being declared! There even seemed to be confusion over who owned the cars.

So not surprising Mr & Mrs Holmes lost the case.

Read the full details by clicking here

So what should you do to prove there is no private use:

  1. Keep the car on the company’s business premises
  2. Keep the keys at the company’s business premises
  3. Prepare a Board Minute
  4. Make sure your contract of employment bans private use
  5. Keep a mileage log
  6. Insure the car principally for business use

HMRC have specific rules on keeping vehicles at home in EIM23465

Even if you do meet the 60% rule you still have to prove ‘no private use’

steve@bicknells.net

 

 

Salary Sacrifice could save 45.8% in Tax and NI – how does it work?

Most employees pay 20% tax, 12% Ees NI and their employer pays 13.8% NI, so thats a total tax of 45.8% on employment income.

 

There are a range of tax and NI free benefits, for example childcare vouchers, where £55 per week can be paid by the employer, so lets use that as an example, using the calculator

http://listentotaxman.com/index.php

An employee earning £30k a year gets

 Wage Summary  Yearly  Monthly  Week
Gross Pay £30,000.00 £2,500.00 £576.92
Tax free Allowances £7,475.00 £622.92 £143.75
Total taxable £22,525.00 £1,877.08 £433.17
xTax due £4,505.00 £375.42 £86.63
National Insurance £2,732.64 £227.72 £52.55
Total Deductions £7,237.64 £603.14 £139.19
Net Wage £22,762.36 £1,896.86 £437.74
Employers NI £3,164.06 £263.67 £60.85

 

 

 

 

 

 

 

Total Tax and NI = £10401.70

If they use Salary Sacrifice for £55 x52 = £2860, new salary would be £27140

 Wage Summary  Yearly  Monthly  Week
Gross Pay £27,140.00 £2,261.67 £521.92
Tax free Allowances £7,475.00 £622.92 £143.75
Total taxable £19,665.00 £1,638.75 £378.17
xTax due £3,933.00 £327.75 £75.63
National Insurance £2,389.44 £199.12 £45.95
Total Deductions £6,322.44 £526.87 £121.59
Net Wage £20,817.56 £1,734.80 £400.34
Employers NI £2,769.38 £230.78 £53.26

 

 

 

 

 

 

 

Total Tax and NI = £9091.82

A saving of £1309.98 (45.8% of £2860)

For saves on this scale should you be looking at Salary Sacrifice schemes for your employees,I have seen schemes where it can be applied to a wide variety of things from Pensions to Cars

steve@bicknells.net