In 20 years the UK plans to ban the manufacture of petrol/diesel cars so that this switch is more a choice of when rather than if. There were just 3,500 electric cars registered in the Uk in 2013 and now there are 230,000 so the technology and infrastructure is rapidly developing to make owning an electric car easier and more efficient.
The government is also pushing us to buy electric cars with incentives both for private owners and employees with an electric car purchase. in the 2020/21 tax year purely electric cars will have a 0% benefit-in-kind meaning there average care owner is likely to save £2,000 plus a year in tax.
Why go electric
Since April 2018 small businesses that buy cars with carbon dioxide emissions of less than 50g per kilometre have been able to claim a capital allowance equal to 100% of the value of the car, this covers electric vehicles. In other words the entire cost of the car can be deducted from company profits before any tax is paid.
If you buy a new fully electric vehicle the government will , currently at the time of writing , will pay £3,500 of the cost for you. Note: be aware that this is usually deducted from the advertised selling price by the manufacturer.
Maintenance bills are likely to cheaper because of the reduced number of moving parts, with the exception of battery replacement at around 100,000 miles.
With the forecast growth of low and ultra low emissions zones in the major Uk cities in the next couple of years, currently electric cars are not covered by these.
Business miles can currently be claimed at 45 p per mile for the first 10,000 miles and 25p per mile there after, this includes miles driven in electric vehicles. Contrast this to the fact that most electric cars use between 2-5p worth of electricity per mile, this makes electric cars very cost efficient.
Is charging an issue?
Most people can get away with using personal charge points at home most of the time so that you can charge overnight without any issues. The government currently subsidises the installation of the charge point, this does not cover the whole cost but goes a long way towards it.
If your, employer installs a charging point at work and allows you to charge there this is not currently seen a benefit-in-kind.
What to do next
This post is our attempt to make an article recently released in Tax Essentials for Advisors, and additional material, accessible to all. Why not leave a comment and let us know how we did? For further information on this and other topics then request more information or contact us at 01332-369999 or through the contact page of our website www.milestone-solutions.co.uk