CAPITAL ALLOWANCES (claimable by the company against corporation tax profits)
Until 1 April 2021 (5 April 2021 for income tax) a low or zero emission car can qualify for a 100% first year allowance (FYA) if its CO2 emissions do not exceed 50g/km and the car is purchased new and unused..
PERSONAL INCOME TAX BENEFIT CHARGE
The percentage of list price of a company car which is taxed as a benefit is determined by the CO2 emissions of the vehicle. For 2019/20 low emission cars (up to 50g/km) are taxed at 16% of list price, or 20% for diesels.
From 6 April 2020 the policy is switched round to once again encourage the provision of electric cars and hybrid vehicles. The appropriate percentages for cars with CO2 emissions of up to 50g/km will take into account the range for which the car can be driven using only electric power. For rates see table below – with lowest rate potentially 2% of list price
But be aware that no announcements made regarding policy from 6 April 2021, so no guarantee that the low rates for electric vehicles will continue.
| BENEFIT-IN-KIND CHARGE FROM APRIL 2020 | |||
| CO2 emissions | Electric only range | Petrol hybrid | Diesel hybrid |
| 0 | All (pure electric) | 2% | 2% |
| 1-50 | 130 or more | 2% | 6% |
| 1-50 | 70-129 | 5% | 9% |
| 1-50 | 40-69 | 8% | 12% |
| 1-50 | 30-39 | 12% | 16% |
| 1-50 | Up to 30 | 14% | 18% |
COST OF CHARGING
Where the employer pays for the cost of charging the company-provided electric vehicle there is no taxable fuel benefit for the driver, as electricity is not classified as a fuel for the car or van benefit regulations.
Where the driver of the electric vehicle pays for the electricity to power it, either from their domestic supply or by charging at a roadside station, the employer may reimburse the employee for that cost at a rate of 4p per business mile.
Where the company allows employees to charge their own electric vehicles at the workplace, there is no taxable benefit for the provision of that free electricity.
USE OF OWN CAR
Where the employee uses his or her own electric car for business journeys the company can pay the normal tax-free mileage allowance to the individual of 45p per mile for the first 10,000 miles driven in the year, with additional business miles reimbursed at 25p per mile. The driver may also claim the passenger rate of 5p per mile for every person he or she takes on the same business journey.
