There are many benefits to being an electric car user and they don’t just stop at the planetary and sustainability benefits. Using an electric car actually provides tax benefits. Because it aids governments in reaching their green goals, it can be very financially rewarding!
Grants Available
You can get a discount on the price of brand new low-emission vehicles through the plug-in vehicle grant the government gives to vehicle dealerships and manufacturers. You could claim up to £3,500 on new cars, £1,500 on motorcycles and mopeds, and a whopping £8,000 on vans! These grants do depend on the model you choose and the emissions level so it’s best to do your homework. You could also get up to 75% towards installing your charger via the Electric Vehicle Homecharge Scheme.
Tax Laws and HMRC
The government is very accommodating to those who drive electric cars, especially to employees and business owners. For pure electric cars, lower appropriate percentages these vehicles apply, creating an immediate taxable benefit vs a hybrid, petrol or diesel car. Remember to include the battery in the price as HMRC recognise it as crucial to driving the electric car. If you’re a business owner and looking at buying a company car, you can benefit from 100% of the cost being included in your first-year capital allowances, so you will get full tax relief for the car in the year you purchase it.
Electricity and Fuel
Tax law does not recognise electricity as a fuel, meaning that pure-electric cars for businesses will not have to pay a fuel benefit charge, regardless of mileage.
No BIK Tax
As of April 2020, the government has proposed that those driving a purely electric vehicle will pay no benefit-in-kind tax. The HM Treasury has created two new BIK tables for company car drivers, those that registered before or after April 6th 2020. For cars first registered from April 6th 2020, most company car tax rates will be reduced by 2% points, meaning that pure electric vehicles will be taxed at 0%.
Benefits for Employees
Employees can enjoy many benefits even for their personal electric car, from April 2018 if the employer has a charging point at work, you can use this for your personal car with no additional tax to pay.
If it’s a company car that you also use privately, you will benefit from no tax to pay if your employer pays for a charging point to be installed at the employee’s home, pays to lease the battery or provides a £100 per year charge card to allow access to commercial or local authority vehicle charging points.
Electric car taxable benefits can be difficult to research and navigate but that’s where we come in! If you’d like financial advice, accounting support, tax planning or other business finance help, visit our website here.
