Ethical values mean a lot to us - so we are really excited about this news from HMRC.
Traditionally, running a car through a business is an expensive way to drive for work. But this summer HMRC announced a major change for businesses... as long as you go all green.
At the moment, not only is the company is charged employers national insurance (currently set at 13.8% that adds up), but the employee also gets charged a benefit in kind tax on too - and the cost of that can vary depending on their tax codes and the type of car.
However change is nigh- HMRC have made a decision to help businesses to get eco friendly next year by reducing all NI and BIK tax to.... ZERO.
What? Nothing? Are you Sure?
Yes - that's right. 0%. No NI for the employer, and no tax for the employee... BUT (there's always a but with tax)
As long as you have a fully electric car.
Only for 2020-21
Rate goes to 1% 2021 - 2022 and then 2% the following year*
*for 0% emission cars and 1-50 g/km (electric range >130 miles)
Still - that's a pretty hefty saving for businesses looking to go electric and there are cheaper rates for approved hybrids.
Think of this - you get a very pretty 2.0ltr diesel BMW 3 Series, with emissions between 110 and 115g/km CO2 and a sale value of £32k.
Emissions will be subject to 31% BIK from April next year.
That would cost a basic rate tax payer £2000 for the year in benefit in kind tax, with a high rate tax payer forking out £4000. Phew. And then the employer (or, your business if you own the business) gets charged an extra 13.8% on top of that.
Last year - I took a leap and traded my diesel for a lean clean green machine... aka a plug in hybrid electric car, and I love it.
I haven't missed diesel, and for running to the office, to clients and to the station... it's ideal. I have petrol as a back up.
Next time I'm going to seriously consider going all green; "Hey, Elon, put mine on order!"
If you are thinking about it, give us a call. We can work out the best option for you and also help secure tax efficient vehicle leasing.