Take extra care when reporting company cars on Form P11D over the coming weeks. For 2020/21, there were significant changes to the percentages that need to be applied to the list price of a car when calculating a benefit, namely:
- Electric cars now have a zero benefit
- The percentage for cars up to 50g/km of CO2 emissions now takes account of how far the car can travel in pure electric mode as well as the level of emissions; and
- There are separate percentage tables for cars first registered up to5 April 2020 and those first registered after that date
For cars purchased from April 2021, there are important changes to the Capital Allowances that businesses claim as a replacement for the depreciation is the accounts:
- New electric cars – 100% of the cost is relieved in the year of purchase (NB this was previously available on a broader range of cars)
- Cars above 50g/km (‘high emission’ cars) only attract very slow tax relief – previously this threshold was 110g/km, so many more cars are now affected
Where cars are leased rather than bought, the leasing cost in the accounts is generally allowable for tax, subject to a 15% disallowance for high emission cars. For leases entered into from
April 2021, many more cars will therefore suffer this disallowance.
If you are unsure how these tax changes affect your business and its employees, please get in touch however if your thinking Electric the time is now.