With the increasing adoption of electric vehicles, it’s always good to get the best deal possible. As electric vehicles are still relatively new the Government have multiple schemes available to push the public into going electric and at the same time saving you money! We are also going to take a look at what Capital Allowances are available with an Electric vehicle resulting in big savings for Corporation Tax.
1. Plug-in Grant For Low Emission Vehicles
New low emission cars are currently eligible for a maximum discount of £2,500 through a government grant provided to vehicle dealerships and manufacturers.
To qualify for the grant, your car must satisfy the following conditions:
- CO2 emissions of less than 50gkm
- VAT inclusive RRP under £35,000
- Able to travel at least 70 miles without any emissions
The plug-in grant is also available for vans:
- Small vans (less than 2,500kg gross vehicle weight)
- Large vans (between 2,500kg and 3,500kg gross vehicle weight).
- The CO2 emissions must be less than 50g/km
- Able to travel at least 60 miles without any emissions.
The grant will contribute to 35% of the purchase price for the vehicles capped at £3,000 for small vans and £6,000 for large vans)
2. Electric Vehicle Homecharge Scheme (EVHS)
The Electric Vehicle Homecharge Scheme (EVHS) is a scheme for installing electric vehicle charging points at homes across the UK. The grant provides funding for up to 75% of the costs of installation and is capped at £350 (including VAT) per installation.
- The person owns, leases or has ordered a qualifying vehicle
- Has dedicated off-street parking (for the charger) at their property
You can apply for 2 charge points at the same property if you have 2 qualifying vehicles.
3. Home Charge Points Provided By The Employer
When the employers offers and covers the cost of a home charging points on behalf of an employee, the tax treatment is:
- Company car (with private use) - no taxable benefit in kind
- Private car (whether used for business travel or not) - taxable benefit in kind based on the cost to the employer.
4. Workplace Charging Scheme
The Workplace Charging Scheme (WCS) as the name suggests is for businesses (including charities and public sector organisations) who are electrifying their vehicle fleet. The WCS is a voucher-based scheme that provides the up-front costs of the purchase and installation of EV charge points.
This scheme is open to organisations that meet the criteria:
- Are a registered business, charity or public sector organisations with a Companies House number
- Must either be:
- A public authority
- An entity that has received less than EUR 200,000 of public support in the last 2 previous fiscal years and current fiscal year), or which is currently pending before applying for WCS and satisfies the eligibility criteria for de minimis aid;
- Needs EV charging equipment or an intent to encourage take-up among their staff
- Located in England, Wales, Scotland or Northern Ireland
- Have dedicated off-street parking
- Own the property or have consent from the landlord for charge points to be installed
5. Capital Allowances - Cars
From April 2021 the capital allowances available for cars comes down to the CO2 emissions being produced by the vehicle.
If the car produces 0 emissions (electric vehicles) you can claim the First Year Allowance where you can claim 100% of the car cost. This amount is deducted from your profit, making this allowance very worthwhile for businesses.
If the car produces CO2 emissions between 1-50, an 18% writing down allowance (WDA) can be used. This is 18% of the cost of the vehicle is claimed in the year of purchase and remains gradually claimed back in future years.
Above 50 CO2 emissions, a 6% writing down allowance is used - 6% of the car cost is claimed in the year of purchase and remains slowly claimed back in future years. This is not tax-efficient and not very common.
6. Leasing Cars
From April 2021, tax relief for leased cars can be limited depending on the CO2 emissions:
If the car has CO2 emissions of 50 or below then 100% of the lease cost can be claimed. If the car has CO2 emissions above 50, the amount of the lease cost that can be claimed is limited to 85% - 15% of the lease cost is disallowed.
7. Capital Allowances for Vans
Vans are considered as plant and machinery by HMRC and if available, you can claim the Annual Investment Allowance (AIA) covering 100% of the cost. If you have used your AIA the van would be considered as a main pool asset attracting the 18% writing down allowance.
From 31 March 2021, van emitting 0g/km of CO2 are eligible for 100% First Year Allowances HOWEVER the government Plug-in Van Grant cannot be claimed.
8. The Super Deduction Allowance
The Super Deduction is temporary tax relief on qualifying capital allowances from 1 April 2021 to 31 March 2023. The Super Deduction allows you to claim 130% on qualifying investments whereas normally (if AIA is not available) only the 18% writing down allowance is available.
If you want to find out more about The Super Deduction, take a look at our comprehensive blog here.
9. Annual Investment Allowance (AIA)
The Annual Investment Allowance is available for businesses to claim 100% of the costs of items that qualify against the profits of the company. The AIA was originally capped at £200,000 however this limit was increased to £1 million until January 2022. Most plant and machinery qualify (similar criteria to The Super Deduction) including vans however cars do not. If you go above the AIA limit, you can claim the writing down allowances available for that asset.
Frequently asked questions
This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
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