By Ross Martin, Accountancy Director at Hive Business

Ever heard of Elon Musk? He’s been described as the world’s raddest man because his projects look likely to change the fate of humanity in one way or another. Or a few ways at the same time.

Musk created and sold PayPal to fund his ranging and insane ventures, one of which is called Hyperloop. It’s a low energy, high-speed ground transport system that uses magnetic levitation to propel capsules (with people in them) at 800 miles an hour. The first round of tests have just been done successfully in the Nevada desert.

Another Musk project is SpaceX, aimed at lowering the cost of space travel in order to make humans a multi-planetary species. It’s well on its way: NASA is a regular client and SpaceX has allowed companies to launch things to space for the lowest cost in history. Next.

How about SolarCity. Musk’s stated goal: to revolutionise energy production by creating a distributed utility to install solar panel systems on millions of homes. SolarCity is now, of course, the largest installer of solar panels in the US.

And, just for a laugh, Musk has decided to build the ‘Gigafactory’, a battery factory that will make more than the entire world’s current production.

In the meantime he’s aiming to turn the automotive industry on its head via Tesla Motors. It’s working: Tesla’s Model S electric car got the best ever Consumer Reports rating of 99/100 and the highest ever safety rating from the US National Highway Safety Administration, a 5.4/5.

So will Tesla be the first electric car to break the market? There have been so many failures in the past, but maybe this time will be different. One reason is that governments around the world have created incentives for individuals and companies to buy clean cars.

In the UK, as of April, we have an extra incentive because buying conventional cars just got more expensive thanks to a 7.5% increase in the personal tax rate (which you ordinarily have to incur to extract funds to buy). A wholly electric car, meanwhile, doesn’t attract the punitive tax charge which other company cars get.

Business owners are always asking us whether they should buy their vehicle through their company and for several years the answer has almost always been no. Perhaps those years of denial have led to a sense of resignment. Have we surrendered to HMRC and stopped trying to get money off cars? The Tesla opportunity doesn’t seem to be widely known, which suggests that on some level we might.

Below is the path that most of our clients will follow when they want to buy a new car through work (there are quite a few variables at play but I have taken what will be typical circumstances for most new car buyers):

Client: “I’m thinking about buying a BMW M5*. If I buy it through my company will I save tax?” (*Deemed the automotive equivalent to the Tesla Model S P90D) 

Hive: “Hahahahahahahahahahaha… Oh, you’re serious?”

Client: “Yes.”

Hive: “OK. We’ve run the calculations and it will cost you £45,000 more in tax to buy it through your company.”

Client: “#!@!” 

Hive: “If you love cars and you’re committed to buying an M5, you’re better off extracting the funds from your company and buying it personally. This will only cost you approximately £20,000 of tax.”

Client: “OK. Thanks.”

The client often ends up buying a lesser car without any magical tax savings. Or, if they buy the M5, they suffer the costs but try to enjoy every minute of it. But following Tesla’s sustained positive reviews and the tax changes in April, buying a Tesla through your company, even with absolutely no pretence whatsoever of using it for business, can save around £10,000 of tax compared to the M5.

Look at it another way: you get 15% more for your money with a Tesla. Say you go for something else for the same money, you can only buy a car that is 85% of the price of the top-of-the-range Tesla Model S P90D (something like a Mercedes E350d with a few options). Plus, with a Tesla your company becomes associated, on some level at least, with the development of mankind. It becomes a bit Musky.

Call us for more details on 01872 300232 or email us at hello@hivebusiness.co.uk.