Excited about electrics
The taxable benefit for having the private use of an electric company car is currently just 1% of list price. From 6 April 2022 the taxable benefit will rise to 2% of list price; it will then be fixed at that level until April 2025. However, even at 2% of list price, this is a bargain, as the company will cover the capital cost of the car, the insurance and any repairs or servicing.
If you want a hybrid car, those models that can drive at least 130 miles on electric power only also have a taxable benefit of just 2% of list price. Driving an electric van is even more beneficial, as there is zero taxable benefit for the driver!
Where a business buys a new electric car or van, it can claim 100% of the cost as a capital allowance in the year of purchase. For an electric car to qualify for this 100% First Year Allowance it must be acquired brand new (not second-hand) before 1 April 2025.
Companies that acquire brand new vans can claim a super-deduction of 130% of the price, if the van is acquired before 1 April 2023.
Where the business installs electric vehicle charging points before 31 March 2023, it can claim 100% of the cost in the year of purchase. There are also Government grants available for individuals who install electric vehicle charging points at their home.
Where employees are permitted to freely charge up electric vehicles at work, there is no taxable benefit for the use of that electricity. Drivers of electric company cars who pay for their own charging can claim a tax-free allowance from their employer of 4p per business mile driven.
Drivers who use their own electric cars for business journeys can claim the normal mileage rates of 45p per mile for the first 10,000 miles and 25p for any additional business miles driven in the tax year.
Consider the tax incentives for electric or hybrid company cars.