Now we all know the argument for electric cars in relation to their high up front cost vs low running cost and of course the environmental effects.
But how many of us know the tax incentives for going green on your company vehicles?
As an accountant it is our job to advise you on tax saving schemes, we also quite like looking at shiny new cars!
The full cost of the vehicle is written off against profit in the first year! Therefore giving the tax saving in year one!
Electric vehicles are currently exempt from car tax! Yes I said exempt!
When a company car is made available for private use, a Benefit-in-kind (BIK) rate is calculated. Electric vehicles with a CO2 under 50 are exempt from this tax, but only until 2015! After which a rate of 5% will be introduced.
Plug in car grants are available up to the value of £5,000.
Fuel costs can be as low as 2p per mile! Do you remember the last time that price was advertised on the petrol station forecourt?
So good are electric vehicles at avoiding tax, that there’s a real untapped potential here. While an ordinary company car may make a dubious perk, accepting an electric vehicle is substantially better than being given additional cash. Real money is taxed at 20%, 40% or 50%. An electric vehicle is taxed at, well, zero.
The Renault Zoe for example has an RRP of £17,333 but with the grants and tax savings works out at a 3 year company cost of £10,669! A saving of £6,664!
It’s a no-brainer
So is it a good idea to run an electric vehicle as a company car? As long as you understand the limitations and benefits of electric cars, and are happy with that side of the ownership equation, the financial case is a no-brainer. Going electric is very clearly the best business bet.
The paintwork is also up to you! Pink leopard print is not for everyone.
If you would like more business or tax advice from a modern and friendly accountancy firm in Coventry, call Trinity today on 0800 954 2099