I recall the days when having a company car was fantastic for tax purposes. That was because the true value of the benefit was much higher than the tax charge. Unfortunately over the last 20 years, or so, successive governments have piled on the misery for both employees and employers by increasing the benefit in kind taxation substantially. As a result it doesn’t make much sense for drivers of petrol or diesel cars to have a company car anymore.
The good news is that the benefit in kind taxation regime is about to improve dramatically but for low or zero emission CO2 emission cars, meaning that 100% electric company car drivers will have a major tax boost from next tax year, 2020/21. Why is this?
Well the government has had a complete re-think and decided to reduce the benefit in kind taxation on zero CO2 emission company cars from 16% in 2019/20 to 0% in 2020/21 then 1% in 2021/22 and 2% in 2022/23.
Further tax benefits include Class 1 A NIC employer contribution of 13.8% reduced substantially because of the much lower BIK from 2020/21 onwards. Corporation Tax relief on the net of VAT rental payments at a rate of 19% currently reducing to 17% from 1 April 2020. VAT at a rate of 20% reclaimable on the rentals too. Oh and free road tax!
You even benefit from free parking on G spaces in CMK via an annual green permit.
Teslas are inexpensive to maintain and charging is very low cost typically £10-£15 overnight for a full charge from a home charging point.
Tony Byrne - Wealth and Tax Management