Save the planet and save your business some cash
If you have a limited company and you are looking at purchasing a new vehicle why not purchase a fully electric car?
Whether it’s a commercial vehicle, a vehicle needed by an employee to carry out their job or a director’s perk, the range and types of electric vehicles available are expanding every day, from a small hatchback up to a bus!
As long as the car is full electric (not hybrid), brand new and either purchased outright or through hire purchase, the company can receive the cost of the vehicle as a deduction against profits in the accounting period of purchase.
For instance, if company profits were £100k, and the new vehicle cost £50k (including VAT) the £50k would be deducted from the £100k profits for that accounting year, meaning that corporation tax would only be levied on £50k of profit.
A point to note is that, the company cannot reclaim the VAT back from HMRC on the company VAT return.
As with all company cars, unless it is a pool car, there is a benefit in kind charge. This means class 1A national insurance is payable by the company and income tax by the director/employee. However, unlike hybrid, diesel and petrol cars, electric cars have a very low benefit in kind percentage. Currently this is only 3% of the list price and increases by 1% per year to April 2027, when the rate will be 5%.
As an added bonus, when you have the charging station fitted at the company office and your home, this cost can be treated as a deduction by the business against profits. Another positive in helping to save the planet!
If charging the vehicle at your home, you can also claim 7p per mile for all business journeys made as an expense claim from the company. Unless you have an app or a charging unit that is clever enough to tell you exactly how much electricity each charge has used, the flat 7p per mile rate is a much easier calculation to make.
The U turns on taxation in relation to double-cab pickups won’t impact on electric purchases, as long as they are fully electric and brand new, allowing you to help to save the planet.
If you have any questions about how you can save the planet with some eco savings for your business, then feel free to get in touch with our team and we’ll be more than happy to help you.
