Electric cars are now only a 1% benefit in kind for the tax year 2021/22!
For personal electric cars provided to employees the benefit in kind rate for the employee is only 1% of the list price! ?
Meaning for a £30,000 vehicle employees will pay tax on a benefit of only £300. For basic rate tax payers (total income under £50,270) at 20% that will mean £60 cost to employee in tax and for higher rate tax payers £120.
With a proposed 2% from 2022/23 until 2025! It looks a great long term option.
With Capital Allowances also available at 100% for buying a new electric vehicle, meaning you get 100% tax relief on the cost in the year of purchase, it’s looking great for people looking to switch.
Employees including directors who are given a company electric vehicle as a benefit can reclaim mileage for business journeys at 4p per mile to recoup home charging costs. Remembering that from home to permanent workplace is not classed as a business journey.
Want to own the vehicle personally?
It is also looking very attractive to possibly own the electric vehicle personally and claim business mileage as you are currently still allowed the standard 45p per mile for first 10,000 miles and 25p thereafter! With electric miles costing approximately 4p per mile, it could be very cost-effective benefit!
Not sure which vehicle to buy?
As with any purchase, there are lots of things to consider and any clients should please contact us to discuss before making your decision to review all your options.
If you are thinking of purchasing a vehicle that isn’t electric you can review the possible benefit in kind here.