Making the Most of the Benefits of Electric Vehicles

Looking to buy a new company car then why not make the most of the benefits of electric vehicles.

Is VAT recoverable?

If there is any private use of the vehicle then you would not be able to recover VAT on the purchase. If the car is restricted for business use only and not available for private journeys (including home to work) then you would be able to claim back the VAT on the purchase of a ‘pool’ car. Even if it wasn’t electric.

Other cars where you would be able to claim back the VAT would be cars for driving instructors and taxis.

Capital Allowances

For new and unused cars purchased from April 2021, where the emissions are 0g/km the business can claim first year allowances. This means you can claim the full cost of the vehicle from your profits before tax. If you buy the car for your employee then you can claim the full cost. If you are a sole trader or partner then you can only claim the business element.

Benefit in kind for employees

When a company provides cars for employees there would be a substantial benefit in kind of up to 35% of the value of the car when new. If those cars were new and unused electric vehicles, with emissions from 1 – 50g/km and a pure electric range of 130 miles, then the benefit in kind is considerably less. For 2021-22 it would only be 1% of the value of the car and in 2022-23 it only rises to 2%. To calculate the company car benefit charge please go to HMRC at http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

Congestion Charges

Don’t forget that electric cars are also exempt from congestion charge tax, so if you are travelling in areas where clean air zones exist it could make considerable savings. The current congestion charge in London costs £15.00 per day per vehicle between 07:00 and 22:00 every day. https://tfl.gov.uk/info-for/media/press-releases/2020/june/temporary-changes-to-the-congestion-charge-to-secure-safe-recovery