• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
enquiries@advaloremgroup.uk
01908 219100
Lumina
CLIENT LOGIN
Lumina
Ad Valorem

Ad Valorem

Treating your business like ours

  • About
    • About Ad Valorem
    • Meet the team
    • Work for us
    • Testimonials
    • Specialisms
    • Liric Accountants
    • Taylor Roberts
  • Services
    • Audit
    • Cloud Accountancy
      • Cloud accounting packages
      • Book-keeping Packages
      • Getting the best from your cloud
    • Tax Services
      • Self Assessment
      • Corporation Tax
      • Share Schemes
      • Patent Box
      • HMRC enquiries and settlements
      • Capital Allowances
    • R&D Tax Credits
      • R&D Tax Credits for Business
      • R&D Tax Credits for Accountants
    • Finance & Banking
    • Wealth Management
  • News & Insights
  • Events
  • Contact Us
< Knowledge Base

How will the change in Tax year effect the tax you pay on your company electric vehicle? - Ad Valorem

April 20, 2020

Filter by: Electric Vehicles |

My Mate Says…the change in Tax year will effect the tax you pay on your company electric vehicle?

With the knowledge around climate change improving daily and the technology behind electric cars evolving, there has been a surge in employers and employees becoming more environmentally conscious and opting for the use of electric vehicles. Additionally, one of the great financial benefits of purchasing an electric car for business use is the corporate tax deduction.

First year allowances.

First year allowances give businesses 100% capital allowance deductions if the asset acquired qualifies for this relief.

For a few years now, businesses have been able to claim first year allowances on cars with low emission levels or on electric cars. Each year the emissions deemed as ‘low’ have been reducing to cater for the change in knowledge around carbon emissions and its repercussions. However, if you purchased a fully electric car then you would be entitled to 100% deduction against tax profits.

For example for a company car: priced at £40,000 that is fully electric you would be able to claim 100% capital allowance deduction which would give you a tax saving at 19% (corporation tax relief) so effectively you would not pay tax on the £40,000.

The corporation tax policy is due to change again before March 2021, it gives us a small window of opportunity to act now on the 100% corporation tax deduction via capital allowances for this allowance to qualify.

As the employer you are also required to pay class 1 A national insurance which is calculated at 13.8% of the benefit in kind value.

Benefit in Kind.

The complications with this policy tend to start when a business allows someone to use a car for personal purposes as well as business needs as this becomes a taxable benefit in kind. Every year the taxable benefit in kind is re-evaluated and changes, so it very rarely stays consistent year on year, see below for further details.

For example for an employee using a company car: originally purchased at £40,000 that is fully electric you currently have a benefit in kind value of  £6,400 (16% X 40K) which would be taxed on you personally, the rate will depend upon whether you are a basic rate, higher rate or additional rate tax payer. So you could be paying £2,560 tax annually as a higher rate tax payer.

However, from he 6th of April 2020 these rules will change and the fully electric car will have a benefit in kind rate of 0%, which would therefore mean no tax would be due on this benefit for that tax year.

Benefit in Kind Tax changes

We won’t fully know the changes to the electric vehicle tax until the government release their annual budget which is due to become public on the 11th March 2020 with any changes coming into effect as of the 1st April so definitely keep an eye out for that to be released!

However, with the corporation tax policy due to change again before March 2021, it gives us a small window of opportunity to act now on the 100% corporation tax deduction via capital allowances for this allowance to qualify.

Footer

2 Manor Farm Court, Old Wolverton Road,
Wolverton, Milton Keynes MK12 5NN
01908 219100
enquiries@advaloremgroup.uk
  • About
    • About Ad Valorem
    • Meet the team
    • Work for us
    • Testimonials
    • Specialisms
    • Taylor Roberts
  • Services
    • Cloud accounting packages
    • Cloud Accountancy
    • Tax Services
    • R&D Tax Credits
    • Finance & Banking
    • Wealth Management
  • News & Insights
    • News & Insights
    • Contact Us
    • Sitemap

Ad Valorem Group © 2025

  • Privacy & Cookies Policy
This website uses cookies to improve your experience. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesCloudflare set the cookie to support Cloudflare Bot Management.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga1 year 1 month 4 daysGoogle Analytics sets this cookie to calculate visitor, session and campaign data and track site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognise unique visitors.
_ga_*1 year 1 month 4 daysGoogle Analytics sets this cookie to store and count page views.
CONSENT2 yearsYouTube sets this cookie via embedded YouTube videos and registers anonymous statistical data.
pardotpastThe pardot cookie is set while the visitor is logged in as a Pardot user. The cookie indicates an active session and is not used for tracking.
vuid1 year 1 month 4 daysVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos on the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
test_cookie15 minutesdoubleclick.net sets this cookie to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysYouTube sets this cookie to measure bandwidth, determining whether the user gets the new or old player interface.
YSCsessionYoutube sets this cookie to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the user's video preferences using embedded YouTube videos.
yt-remote-device-idneverYouTube sets this cookie to store the user's video preferences using embedded YouTube videos.
yt.innertube::nextIdneverYouTube sets this cookie to register a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverYouTube sets this cookie to register a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
_wpfuj1 yearDescription is currently not available.
SAVE & ACCEPT
Powered by CookieYes Logo