Everything You Need To Know About Electric Cars

Employers providing electric cars to employees is quite the talking point right now, and while there were no specific announcements in the recent Autumn Budget 2021, a bit of a Q&A will be useful ...

The question I get asked most often is what Benefit in Kind is payable in relation to electric cars. Well, the appropriate percentage at the moment is 1% of the list price, however, this does increase to 2% in the 2022/23 tax year and I can see it increasing as electric cars become more popular.

"Don't forget to include the cost of the battery in your vehicle list price calculations!"

I also get a lot of enquiries about electric cars triggering fuel Benefit in Kind. This cannot arise on employer-provided electric cars as HMRC is clear that electricity is not classed as fuel. However, if you, as an employer, reimburse an employee for home electric charging and they also use the vehicle for personal milage, then that reimbursement is taxed as earnings.

There is still a 100% first-year capital allowance for electric cars and this is set to continue until the 31st of March 2025. There are charges on the disposal of the vehicle, but any balancing charges can be sorted out through good bookkeeping.

When it comes to paying business mileage in a company supplied electric car, if the employee is charging from home using their own electricity, then they can claim 4p a mile on business mileage.

For electric cars used by the business owner, the business is not entitled to claim input tax on charging costs so unlike with petrol or diesel, getting some VAT back is out of the question.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.