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Electrical Vehicles
Fact Sheet
Fact Sheet
Electrical Vehicles
Fact Sheet
With electric vehicle technology continuously advancing and a ban on the sale of diesel and petrol cars looming on the horizon – it could be the time to change. We outline below some of the key features and benefits to you and your business and the implications of the car being fully electric or a hybrid.
Electrical Vehicles
Fact Sheet
For 2020/21 there was a dramatic reduction with the percentages for fully electric cars reduced to 0%, although rates have increased now slightly to 1% in the current tax year 2021/22 and will rise to 2% for 2022/23, 2023/24 and 2024/25.
For hybrid cars the emissions will be taken into account and the electric range (the number of miles it can do on battery power alone) to determine the percentage.
Furthermore, whether the vehicle was registered before or after 6 April 2020 makes a difference. There are two different percentage tables according to the registration date.
Company Car
fuel benefit charge
For diesel and petrol cars if fuel is provided to the employee for private miles, then there is also a taxable benefit in kind. In contrast, electricity can be provided by the employer tax free irrespective of how many private miles are travelled.
Company Van
provided for director or employee
The flat rate benefit in kind for diesel and petrol vans used privately is £3,500 for 2021/22 plus, if private fuel is provided, an additional flat rate van fuel benefit charge of £669.
In comparison, an electric zero-emission van used privately as well as for business, will not give rise to any benefit in kind for 2021/22.
HMRC – Advisory Fuel Rates
There are set rates https://www.gov.uk/guidance/advisory-fuel-rates
when:
• employees are reimbursed for business travel
in their own cars
• employees are required to repay the cost of
fuel provided
The advisory electricity rate for fully electric cars is 4 pence per mile.
Hybrid cars are treated as either petrol or diesel cars for advisory fuel rates.
If the vehicle is charged at the workplace – this is tax free – no benefit in kind arises. If the employer pays for the car to be charged elsewhere, the cost of the reimbursement will be taxable.
Approved Mileage Allowance Payments for business travel – employees can receive up to 45p per mile for the first 10,000 miles and 25p per mile thereafter. These same rates apply whether the car is electric, hybrid, petrol or diesel.
Government Grants
A discount is available on the price of certain (government approved) brand new low-emission vehicles. You do not have to claim the grant – it is applied by the dealer when you buy the vehicle.
The grant depends on certain conditions and the category of the vehicle. The maximum for cars is £2,500.
More details and a list of approved vehicles can be found here https://www.gov.uk/plug-in- car-van-grants
For businesses, there is also a Workplace Charging Scheme whereby vouchers can be applied for. These assist with the upfront costs of the purchase and installation of electric vehicle chargepoints. Vouchers are a maximum of £350 per socket and you must apply before you undertake the installation.
Full details can be found here https://www.gov.uk/government/publications/workplac e-charging-scheme-guidance-for-applicants-installers-a nd-manufacturers
For individuals wishing to have a chargepoint at home, there is the EV Homecharge Scheme which is similar to that for businesses.
For the terms and conditions, please refer to https://www.gov.uk/government/publications/customer -guidance-electric-vehicle-homecharge-scheme/electric -vehicle-homecharge-scheme-guidance-for-customers
VED Rates (Road Tax)
All zero-emission light passenger vehicles registered from 1 April 2017 until 31 March 2025 are exempt from the Vehicle Excise Duty.
Limited Company & Sole Trader
Capital allowances reduce the taxable profits and can be claimed (at different percentages) when purchasing business assets. As it currently stands, for qualifying zero emission vehicles, the full cost can be claimed in the year of purchase.
The business can also claim 100% FYA for the cost of installing charging points at the workplace. If employees use the charging points to charge their own or company cars – there is no taxable benefit provided conditions are met (broadly that the facility is at or near the workplace & available to all employees).
Company Car
provided for director or employee
The director or employee is subject to income tax on the annual car benefit. In addition, the company has to pay Class 1A National Insurance of 13.8% on any company car benefits.
The benefit is calculated by applying a set percentage (based on the car’s CO2 emissions) to the car’s total list price (list price when new plus and accessories and battery if leased separately). An additional 4% is added for diesel cars (unless RDE2 compliant), subject to overall cap of 37%.
For 2020/21 there was a dramatic reduction with the percentages for fully electric cars reduced to 0%, although rates have increased now slightly to 1% in the current tax year 2021/22 and will rise to 2% for 2022/23, 2023/24 and 2024/25.
For hybrid cars the emissions will be taken into account and the electric range (the number of miles it can do on battery power alone) to determine the percentage.
Employees using own vehicle
01252 494001 / 01760 613400
info@akmaccountingsolutions.co.uk
www.akmaccountingsolutions.co.uk
Next Steps
If you are considering purchasing a vehicle and would like us to review and outline the tax implications based on your individual circumstances, please provide:
• full details of the vehicle you are looking to purchase (make, model, registration date, emissions, electric range and
list price)
• who will be using the vehicle and the estimated number of annual business and private miles
Based on information correct as at 1 July 2021. This is for general information only and professional guidance should always be sought for your individual circumstances.
01252 494001 / 01760 613400 info@akmaccountingsolutions.co.uk www.akmaccountingsolutions.co.uk