If you have been considering buying a new car for your business, then you may have wondered whether electric is the right way to go. In this newsletter we look at the benefits.
Electric Switchover – The benefits
- There is a Government ‘plug in’ grant of up to £3,000 or 35% of the purchase price if lower, off the cost of acquiring a new car with CO2 emissions of less than 50g/km. It must have an electric mileage range of 70 miles or more and the recommended retail price (Including delivery fees and VAT) is less than £50,000.
- The car benefit charge for a pure electric car for the present tax year is nil. For the 2021/22 tax year it will be 1% of the list price (2% for 2022/23 – 2023/24 inclusive 2%).
- If an employee has a company car provided by their employer under a salary sacrifice arrangement, the taxable benefit is usually the higher of the salary given up or the taxable car benefit. This is not the case if the company car has CO2 emissions of less than 75g/km.
- Businesses that install charging points at work for electric vehicles can claim 100% first year allowance.
- Employees can charge their own electric cars at the workplace with no benefit in kind tax charge ensuing. Note that if the employer pays for or reimburses the employee for charging up their own car away from the workplace the exemption does not apply. The charging point must be available to all employees. The same applies if the employee is simply a passenger in a car owned by say a friend.
- The cost of the business installing a charging point at the employees home where they have a company car is not liable to a benefit in kind charge. That would not be the case if it is regarding the employees own car.
- There is no car fuel benefit in kind charge for pure electric cars.
- If it is a company electric car, the employee, in respect of business mileage, can presently claim 4p per mile tax free.
- If it is an employee using their own electric car for business purposes, then presently, they can claim 45p for this first 10,000 miles and 25p for business mileage in excess of that.
- If the business pays for an electric charge card to allow the employee unlimited access to local authority vehicle charging points in respect of their company car, no taxable benefit would arise. This would not be the car if it was the employee’s own car.
- The vehicle excise duty (VED) rates for fully electric vehicles have been reduced to nil until at least 2025. Where the vehicle costs exceed £40,000 there is not VED expensive car supplement. There are reduced VED rates applicable to some plug in hybrid vehicles.
Loose women victory
In the last newsletter we looked at the Uber drivers case, (Two former Uber drivers took Uber to court and successfully won the argument at the Supreme Court to be treated as workers rather than self-employed.) It was interesting to see that Kaye Adams won her IR35 dispute against HMRC in the Upper Tier Tribunal (UTT) this week. Kaye, as well as being a BBC radio presenter, can also be found on the ITV Loose Women chat show, which I avidly watch when munching on my lunchtime sandwiches.
She won despite the UTT believing the BBC had a high degree of editorial control over her work and that there was mutuality of obligation in play here. Both indicators of employment.
- She won on the grounds that:
- In exceptional circumstances she had the right of substitution.
- She had multiple contracts not just with the BBC and ITV but also as a freelance journalist.
- Her contract with the BBC was on a show-by-show basis.
- The judge felt that one should not just look at the literal interpretation of the contract but also the true conduct behind it. The judge felt that although the BBC had editorial control Kaye had a fair degree of autonomy on how the show should be delivered.
- Taking all things into account, Kaye had gone into business on her own account.
What this shouts out to me is the importance to look at the facts of each arrangement and apply the badges of trades test and then review that application to see if the individual concerned should be treated as a worker/employee. Remember we have specialists who can help if necessary.
You can expect another newsletter from us very soon following the budget on Wednesday 03/03/2021.