Company Cars - Is electric your best option? 

Jake Dobbs from Gator Accounting offers his opinion...

Personal Tax
Electric company cars have a much lower Benefit In Kind (BIK) of 2% tax compared to some hybrid and conventional cars which can go as high as 37%. This is also based on the list price as if the car was new rather than any second hand purchase price you may have purchased for.
 
What does this mean?
Imagine you have a choice of two cars that both cost £20,000, one electric and one petrol.

Electric would cost you £80 standard rate tax
Petrol (1 litre with 119 co2 emissions) would cost £1,120 standard rate tax

Corporation Tax
If you buy a new car then again Electric cars give much higher tax breaks due to the First Year Allowance (FYA) where you can claim 100% of the cost against your profits. Depending on the Co2 emissions of a fossil fuel car then the allowance would change to the Writing Down Allowance (WDA) which could be as low as 6%.

What does this mean?
If we use the same vehicles as before... The electric vehicle has a potential tax saving of £5,000. The Petrol vehicle could only potentially save £300.

Overall the government will give tax breaks to guide peoples spending habits and this is why electric cars are far more tax efficient than conventional cars.

But what if an electric car just isn't suitable for you?

Depending on the car itself, it might be worth paying for the vehicle personally and claiming business mileage for business use of the car. This way you can claim 45p a mile (<10K miles).

Every situation will be different so if you are deciding on your next car then make sure you speak with your accountant for the best scenario that suits you and your business.