COLUMN: An electric company car? What to consider

Conversations around sustainability and the environment are on the increase, and naturally, this has resulted in businesses considering their green credentials – particularly if they have a fleet of petrol or diesel company cars, writes Simon Syddall, a director at Duncan & Toplis.
Duncan & Toplis director Simon Syddall.Duncan & Toplis director Simon Syddall.
Duncan & Toplis director Simon Syddall.

The car industry is expecting 2020 to be a breakthrough year for electric cars, with around 100,000 expected to be sold in the UK, but questions remain around their cost and their practicality on a day to day basis.

The current 16 per cent benefit-in-kind charge to tax is not overly generous, but for 2020-21, a company car driver using a pure electric vehicle will have a zero per cent benefit-in-kind charge, which is projected to rise to two per cent for 2022-23. Coupled with a 100 per cent writing down allowance for capital allowances for vehicles emitting less than 50g/km of CO2, that might make electric cars more attractive to businesses from a tax perspective.

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So, what is the reality? There were 11 pure electric models for sale new in the UK in December 2019, with a further 10 coming to the market this year.

Range is a key issue for businesses to consider. For the 11 on sale, ranges on full charge vary from just 67.7 to 379 miles. The average is 241 miles, which would just be enough to get you from Sleaford to London and back.

So, where do we go from here? There is a ‘halfway house’ in the form of the hybrid models. We have seen some significant benefit in kind tax savings for company car drivers of these models.

Only vehicles with CO2 g/km below 50 qualify for the 100 per cent tax writing down allowance, with 51 to 110 being 18 per cent and just eight per cent above 110, so they’re not as tax efficient as pure electric cars.

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Before making the move towards electric cars, analyse any proposed purchase and establish the whole of life net (of tax) costs to enable accurate comparisons to be made. Factor in the ‘knowns’; the initial cost, insurance, road fund, repair and servicing and fuel/charging costs, finance costs, and factor in tax costs and reliefs.

There is no one size fits all, so it is worth getting that advice from tax experts before making a potentially expensive mistake.

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