Taking a company-provided electric car can provide you with some real savings in running costs and road tax.
You will be taxed on the benefit of driving the electric car, calculated at 2% of its list price, but this is low compared to company cars that run on purely petrol or diesel, where the annual benefit is 15% to 37% of list price. There is no taxable benefit when you use the company’s electricity to charge the car at work. If you need to charge the vehicle at a public charging point your employer can reimburse you for this cost, with no extra tax charge, but you should keep records of the amounts claimed.
Even if you give up some salary in order to take the electric car, you will be taxed on the benefit of the car, not the salary you gave up; this doesn’t apply if you swap salary for many other benefits.
The company can claim a full tax deduction for the cost of purchasing an electric car in the year of acquisition. If the vehicle is leased, the leasing costs are also fully deductible for an electric or low emission car. No VAT is deductible on the purchase of a company car, but 50% of the VAT on lease payments is normally recoverable.
As long as your total remuneration package reflects the work you do for the business, the costs associated with the provision of the electric car (e.g. insurance), plus your salary, are tax-deductible for the company.
Talk to us about the various tax breaks available on electric vehicles if you are purchasing or leasing company cars.
