We are starting to see more and more electric cars on the roads and the number of charging points is rapidly increasing to keep up with this trend. The sale of petrol and diesel cars is set to be banned from 2030 and everything seems to be moving towards that point.
We have previously written about how the way you buy a car will influence your tax liability, and also the further difference that arises if that car is an electric one. You’ve done the sums and gone ahead and bought or leased an electric car through your company, but what does this mean in terms of the ongoing costs?
Basically, from an expenses point of view, the car ‘belongs’ to the company, either as owner or lessee. As a result all costs associated with the car are allowable expenditure within the company accounts. This will include:
- Annual insurance
- Charging costs
- Servicing costs
- Replacement tyres
- Vehicle tax (where relevant – this is nil for purely electric cars with zero emissions and can be up to £135 for hybrid cars)
Most of these costs are straightforward, but the charging costs maybe need greater explanation. If you charge at a point where you have to pay, again the cost is simple to identify. It becomes more complicated if you charge your car at home. Your company can pay to install a charging point at your home without this being a taxable benefit, provided it is used to charge the company car. The next question is how to calculate the cost of the electricity used to charge the car. The simplest way to do this is to use HMRC’s advisory fuel rates, which suggests a flat rate of 5p/mile for electric cars.
If you are considering buying an electric car through your company and want to check the tax considerations, or you have already bought the car and want to ensure you claim all possible costs through your company, please get in touch.
