Electric and ultra-low emission cars (no more than 50g/km of CO2) are being promoted widely and there are generous tax advantages available to businesses for the purchase or lease of these types of car.
If you are planning on purchasing a new company car, or, if you are a sole trade or partnership, a car that you use in your business, it may be worth considering an electric vehicle. Your business could benefit from the following:
- 100% first year allowance due on purchases of new electric (or ultra-low emission) cars made prior to 5 April 2021. Please note that for sole trades or partnerships this first year allowance will be restricted to the business use of the vehicle
- For company cars the benefit in kind of 0% of list price will apply for 2020/2021, rising to 1% in 2021/2022 and 2% in 2022/2023 (it is 16% in the current tax year 2019/2020). This would have the effect of reducing your personal income liable to tax
- This would result in a lower or nil Class 1A NICs liability payable by the company on the benefit in kind
To discuss your purchase further, call our friendly tax team on 01249 712074.