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 ...
Employers providing electric cars to employees is quite the talking point right now!
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 increase further 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 NEW electric cars and this is set to continue until the 31st of March 2025 (note such allowances do not apply to second-hand electric cars eg demonstrators or nearly new cars). There are charges on the disposal of the vehicle, but any balancing charges can be contra’d off against further capital allowances on the next car.
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!
For electric cars used by the business owner, the business is not entitled to claim VAT input tax on charging costs so unlike with petrol or diesel, getting some VAT back is out of the question.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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