You should make sure that you refer to the source of information that’s most appropriate for the age of the car in question. This is how you could potentially drive a free electric company car this 2020 tax year, all paid for by the HMRC. They’re treated as separate cars with the relevant reductions applied to each car. According to data from HMRC in 2017, the number of employees paying company car tax reached a five-year high. Cars with less than 30 miles' electric range will pay 14% benefit-in-kind, with a sliding scale down to 2% if your car will drive more than 130 miles on silent e-power. This incurs a tax charge of £959 for a basic rate taxpayer per annum or £1,918 if you are a high rate taxpayer, On the other hand, a Range Rover, which has considerable CO2 emissions, has a percentage charge of 37% on a P11D value of £78k. Switching to an electric car can bring significant tax benefits for businesses and this is set to get even better from April 2020. From 2012 to 2013 onwards there are no longer special rules for qualifying low emission cars. The total amount chargeable for the car cannot be any more than if the car had been available to one employee for private use and there had been no sharing. For electric vehicle owners, it means they will not pay tax next year with 2021/22’s rate set at 1% and 2022/23’s rate at … 2018 Exemption. The obvious example in our case is company cars, which are taxed according to the income of the employee. However, in August alone, new owners registered 2,082 of the Model 3 cars, according to data from the Society of Motor Manufacturers and Traders. If the only car that an employee who holds a disabled person’s badge can drive is one with automatic transmission, the appropriate percentage is calculated using the approved CO2 emissions figure of the closest manual equivalent, which is: The appropriate percentage for every car first registered before 1 January 1998 is based on its engine size, even if (exceptionally) it has an approved CO2 emissions figure. accessory counted at Step 1 is not disregarded). This 0% rate also applies to company car drivers in pure electric vehicles registered prior to April 6, 2020. Remember, for cars registered 1 March 2001 and later the Vehicle Registration Document (V5) or Vehicle Registration Certificate (V5C) will be the definitive source of the approved CO2 emissions figure. Summary of Electric Car Tax Benefits. Hybrid cars do not qualify as electric cars. From 2015 to 2016 there are 2 new appropriate percentage bands: You can find the appropriate percentages for these bands in the ready reckoner at Appendix 2. The list price is the price as outlined above on the day before the car was first registered (when the car was new). A later accessory is one which was not available with the car at the time when it’s first made available to the employee, but is available in the tax year in question. Unsure if a company car or car allowance is the best option for your business? Where 2 cars are provided consecutively the benefit chargeable for each car will depend on the length of time each car was unavailable to the employee. Earlier this year, the Government revealed electric vehicles will be exempt from company car tax in the 2020/21 tax year. However, some of these benefits have wider tax implications for the company and employee, such as a company car – which has been a key role in employee benefits packages over the years. It was announced at the Autumn Budget 2017 that, from 6 April 2018, there will be no benefit in kind charge on electricity that employers provide to charge personally owned electric vehicles. However, if you find a small discrepancy, use the lower figure. If a classic car is bought in a poor state of repair and is restored during the year, then it’s the market value of the restored vehicle on the last day in the tax year when it was available to the employee which is used, not the cost of the earlier purchase. An example would be a tow bar fitted as an option to a car because as part of the job the employee is required to tow a trailer carrying the equipment needed to carry out the duties of the job. Those April changes to benefit in kind taxation were really significant. The Treasury says that for cars first registered from April 6, 2020, most company car tax rates will be reduced by two percentage points. Benefit in Kind (BiK) When a car is provided for an employee by their employer that is available for personal use, the employee must pay … Related: Benefit In Kind: When does a van become a company car? The lower limit of £100 means that inexpensive accessories which are made available during the period are not included in the benefit charge. Company car tax is a tax on the “Benefit in Kind” that an employee is receiving through the provision of a car for their personal use. The price of any later accessories is added to all cars. Where these conditions are fulfilled the benefit of the car to each employee is: However, only availability to those chargeable on the benefit of the car is to be taken into account in making this reduction. The announcement, which sees company car benefit-in-kind tax rates for zero emission cars in 2020/21 cut to 0% from the previously announced 2% but all other already published rates remaining unchanged for cars registered before April 6, 2020, sees reduced rates for cars first registered from April 6, 2020. Make any required deduction for periods when the car was unavailable (paragraph 12.34). By making this positive change, HMRC are increasing accessibility to electric vehicles (EVs) and enabling the industry to grow. The advisory fuel rate for fully electric vehicles has been confirmed by HMRC as 4 pence per mile. If an employer provides electricity to an employee to charge their own car, a benefit in kind arises representing the cost of the electricity used for private mileage, which must be reported to HMRC The provision by an employer of a chargepoint for an employee at their … Electric cars and employees ... Until 5 April 2018, if an employer provided electricity to charge an employee’s personal car then a taxable benefit in kind would arise. The approved CO2 emissions figure is shown on the Vehicle Registration Document (V5) or Vehicle Registration Certificate (V5C). Reimbursements in excess of the AMAP rates are taxable and must be reported to HMRC. The Vehicle Certificate Agency used to produce a booklet called New Car Fuel Consumption and Emission Figures, if you’ve kept a copy of this booklet there’s no need to check the database on the internet as well once you’ve found the CO2 figure for the right model of car and year. If you’d like advice on car allowances or HMRC company car tax, call us on 0207 043 4000 or get an instant accounting quote in just five clicks. The director has a car benefit but no fuel benefit, since electricity isn't fuel. From 2020 to 2021 onwards, you may need some additional information to find the correct appropriate percentage for the car. Pure electric cars will not be subject to any Benefit-in-Kind tax at all for 2020/21 – regardless of when the car was registered. Car benefit is calculated in a series of numbered steps (more details start at the paragraphs given). Benefit in kind (BIK) - this is any benefit which employees receive from employment but are not included in a salary. Car benefit is calculated in a series of numbered steps (more details start at the paragraphs given). An electric Tesla car on the road in Sainte-Anne-des-Lacs, Canada. Find out about the calculation of the company car benefit charge. It’s the most affordable electric car from Tesla, costing between £36,490 and £50,000. For cars registered between March 2001 and March 2017, hybrids enjoy even greater VED benefits thanks to car tax being calculated entirely on CO2 emissions. It will take only 2 minutes to fill in. The list price is the inclusive price published by the manufacturer, importer or distributor of the car if sold singly in a retail sale in the open market in the UK on the day before the date of the car’s first registration. (c) Equipment to allow a disabled person to use the car (see paragraph 12.15). Electric vehicles that are recharged at work will attract 20% VAT on the electricity used. From 6 April 2020, there will be a few changes to P11D forms for Ultra Low Emission Vehicles (ULEVs) such as pure electric and some hybrid cars. The benefit in kind is calculated in numerous ways as determined by HMRC. These enhancements are: The price of initial extra accessories is only added to a car with a list price (the notional price of the car at paragraph 12.5 includes them). Should you offer your employees a company car? If the hybrid car has a CO2 emissions figure between 1 and 50g/km, you will need the appropriate zero emission mileage figure. 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