Tag: Electric 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

What are the tax benefits of Low Emmission and Electric Cars?

If you have a company car the chances are Benefit in Kind tax will be a concern for you, HMRC have a calculator to work this out

http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

But both you and your company could be better off with a Low Emmission or Electric Car.

Capital allowances

If you buy a new car for your business that has CO2 emissions of 110 grams or less per kilometre (g/km) driven, or is electric, you can qualify for a 100 per cent first-year capital allowance. This allows you to offset the whole cost of the investment against taxable profits in the year you make the purchase until 31 March 2013.

Vehicle taxes

New cars have fuel economy labels which show how fuel efficient they are. The label shows how much CO2 the car emits and also how much vehicle tax you will have to pay each year. Lower CO2 emissions mean lower vehicle tax and lower running costs.

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1080532548&type=RESOURCES

Benefit in Kind

Currently zero emmission electric cars have zero benefit in kind but this is set to change in 2015 when the rate will be 13%.

A 5% Benefit in Kind band is now in place for cars that emit below 75g/km CO2, but this will also change in 2015.

steve@bicknells.net