top of page

Electric news for your business car

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)

  1. As long as you have a fully electric car.

  2. Only for 2020-21

  3. 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.

33 views0 comments

Recent Posts

See All

The Chancellor gave his Autumn Statement today. Please find a brief summary below... National insurance rates are being cut by 2% with effect from 6 January 2024. Class 2 NIC’s are being abolished - s

bottom of page