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Is it worth getting an electric company car?

Limited Companies

Probably….

  • If the company buys it outright it can get full Capital Allowance in the year of purchase
  • The Benefit in Kind to the employee or director is only 1% of the car value – on a £35K car that is £350 – and that is what ends up on a P11D and thus on your personal tax return. It is then taxed at your normal rate.
  • The company pays class 1A Employers NI only on that 1% also. So on a £35K car, the  company pays £48.30

Remember: The Benefit is based on the LIST PRICE of the car when new plus any accessories.  And not on what you paid for it.

A company can also pay for the Insurance, the tax, the MOT, the servicing and the repairs.  These are not taxable benefits as the car belongs to the company.

Remember: On a normal car, you should avoid the company paying for any personal fuel as that becomes a fixed benefit in kind even if it only for 1 tank of petrol in the year.  It is always better to claim a mileage allowance.

The  mileage allowance for petrol/diesel/hybrid cars is 45p, for electric vehicles it is only 5p.

Chargers: houses and bungalows no longer benefit from the grant for installing home chargers, but flats and rental properties can as long as you have your own parking space.  The company can install ev charging equipment at your home (and claim any grant) with no taxable benefit as long as it is for a company car.  Subject to the usual rules that the invoice must be addressed to the company and the company must have paid for it.

Sole Traders and Partnerships

Maybe…

Your company can pay for a car, but the capital allowance will need to be apportioned between business and personal use.  Running costs also need to be apportioned, or claim the mileage allowance of 45p for normal cars or 5p for electric vehicles.

Need more information? Contact Us

 

Published On: July 8, 2022

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