Posted: 10 March 2020
Have you thought about an electric car?
What are the benefit in kind rules for 2020/2021 for low emission cars and fully electric cars provided to employees as company cars?
Fully electric vehicles
Employees are required to pay income tax on any benefits that they receive from their employer. The benefit in kind for company cars is calculated based on the car’s C02 emissions and the list price of the vehicle.
From 6 April 2020, the benefit in kind for fully electric cars is being reduced to 0% for the tax year 2020/2021. The Government’s summary of responses document published in July 2019 confirmed that:
“All zero-emission company cars will attract a reduced appropriate percentage of:
0% in 2020/21
1% in 2021/22
before returning to the planned 2% rate in 2022/23”
These reduced rates are applicable for cars registered before and after 6 April 2020.
The advance of these reduced rates will reduce the employee’s income tax liability, and save employers on their Class 1A National Insurance liability.
Fully electric cars will not have any fuel scale rate charges applied to them, as electricity is not a fuel. For reimbursement of mileage, you would use the approved electricity rate of 4p per mile.
There are also tax advantages if you provide your employee with charging facilities at your workplace, and even for the installation of a vehicle charging point to be installed at the employee’s home.
So what car would you choose, here are a few to consider :-
Our personal favourite would have to be the Tesla 3 Performance Model with it's AWD dual motor, a range of 348 miles and 0-60 in 3.2 secs !!! Yes its not cheap (c£52,000) but once you factor in savings in Corporation Tax, Personal Tax and the impact on the environment it is something to seriously consider. Depending on what Porsche 911 model you choose it's 0-60 performance can range from 4 secs to 3.2 secs and so can the price, starting at around £88,000 with the most expensive being around £211,000.
Something to give serious consideration to.............
