30th November 2021
In November 2020 the UK announced that by 2030 the sale of all new petrol and diesel cars and vans will cease, and by 2035 all new cars and vans must be fully zero emission at the tailpipe.
As such the sale of electric vehicles has risen significantly in the last year, despite global supply chain issues impacting manufacturers.
To encourage directors and businesses to make the switch to zero emission vehicles the UK government has been providing financial incentives.
Benefit-In-Kind
Company cars are a common form of benefits employees receive and are taxed as a benefit-in-kind. This tax is reported and collected through a P11D, which is filed annually by 06 July following the end of the tax year.
The amount of tax paid through the P11D as a result of using a company car depends on the CO2 emissions of the vehicle. One of the financial incentives of switching to a zero emission vehicle is the low benefit-in-kind rates, please see the table below:
| CO2 emissions (g/km) | 2021/22 | 2022/23 |
| Zero | 1% | 2% |
| 1-50* | 2 – 14% | 2 – 14% |
| 50 + | 15% – 37% | 15% – 37% |
Car Fuel Benefit
Electricity is not treated as a fuel, therefore, there is no car fuel benefit charge that arises through use of a company car.
100% First Year Allowance (FYA)
Your business can claim 100% of the purchase cost of a new zero emission vehicle in the first year, and this will be available until 31 March 2025.
This is deducted against profits for the year through capital allowances.
Charging Points
The installation of an employer provided charging point also qualifies for 100% FYA.
If the company car is charged using the employer provided charging point at work there is no taxable benefit.
VAT is recoverable where employees charge their car at the workplace charging point.
Mileage Allowance
Should the car be owned by the company, a mileage reimbursement of 5p per mile can be claimed.
There is a 45p per mile allowance for business use of an employee’s own fully electric car.
If you have purchased, or plan to purchase a zero emission vehicle, for your business please feel free to contact us for further information on 01903 300230, or email info@thlacccountancy.co.uk.