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Electric company vehicles - the way forward?
29 April 2021
With increasing climate and environmental concerns, the Government’s gradually moved their focus towards encouraging people to move to electric vehicles with enticing subsidies and lower car tax.
The electric car industry’s seen an immense investment into ‘green fuel’ and ‘eco friendly cars’ over the last decade, as we see more and more electric vehicles entering the market, both cars and vans alike. Gone are the days where the selection was perhaps 3 or 4 unattractive vehicles with a limited range, there are now dozens to choose from, to suit all budgets and tastes.
From April 2020, this has been further encouraged for registrations from this date. The benefit in kind on an electric car provided by a company for the private use of an employee was reduced to 0% for 2020/21, rising to 1% for 2021/22. These rates apply for vehicles with a range of more than 130 miles and increase to 11% for a mileage range of less than 30 miles. For electric vans, they also feature a 0% benefit in kind rate from 6 April 2021.
Moving forwards, the Government’s confirmed they’ll maintain this rate at 2% for both 2023/2024 and 2024/2025.
The tax rates above compare to a maximum rate of 37% for a non-electric vehicle. Going electric just shows what proportionate savings could be made for businesses looking to be more tax efficient.
It’s important to note, these percentages are applied to the list price of the car, not to any discounted price agreed on purchase. Optional accessories, delivery and vat will also need to be included in the list price.
For a company buying an electric vehicle, it’s worth noting that 100% capital allowances are available so the full cost of the car will be deductible against the company’s profits.