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Switch your company cars to electric and save on your tax bill

The introduction of electric cars is certainly becoming more popular. Business owners are quickly switching their company cars thanks to the impressive tax savings. Previously if you would have asked your accountant “should I finance my vehicle through my business” then the response would be “no” as the benefit in kind tax you would pay would far outweigh the tax relief you would get from the vehicle.

However, if you now purchase an electric vehicle and put it through your business then the benefit in kind tax is 0%. On top of this you will get 100% of the costs of your car against your taxable profits with which you pay Corporation Tax on. If we consider this against a vehicle you could purchase the Jaguar iPace for £65,000 and receive a £12,000 saving on your corporation tax bill.

Many business owners have opted to fund their car themselves through a private deal, typically they will be taking dividends from the business to which HMRC will be charging tax. This can be avoided if the company purchases the vehicle, they can then get the positive corporation tax relief on the price of the car, along with the running costs of the car. On top of this you can take the same amount of dividends out of the business and have more disposable income.

Electric vehicles are available from upwards of £25,000. The NGI team are very happy to assist with all funding needs, offering a solution which is often far more competitive than what a mainstream dealer can provide.  To discuss further please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.