With the ever increasing options available to us in the electric car market, I thought I’d clarify the incentives, other than being green of course. If you are a company car driver, or you own a business and are considering a company car, then a fully electric vehicle would give you some generous tax advantages. For the sake of clarity, hybrids don’t attract anything like as much in the way of tax breaks, so probably not worth considering. A number of my clients are buying anything from electric Mini’s to Porsche’s and everything in between, so why?

As an employee (directors included) if you are provided a car, which you use privately, you pay tax on it as a Benefit in Kind. The amount of tax depends on the cost of car amongst other things. One of those other things is the fuel type. For the current tax year, assuming a fully electric car, then you pay tax on 1% of the list price, no matter how many private miles you drive.

Taking an example of a £30,000 car and a basic rate tax payer, the annual tax “hit” is £60 only. The employer (or your business) can also provide electricity to charge your vehicle without any tax implication either. Furthermore, the cost of the car can be set off against the businesses profits in its entirety in the year of purchase, so saving the “employer” substantial tax along the way too.

No brainer? Before you commit to your new electric car consider what you want to use it for. Shorter, town driving is probably the most suited, long journeys would need a bit more planning. I have no doubt electric is the future, but tax breaks aside, I’m not quite convinced the future is here yet personally, but soon….

By Simon Jilks FCCA, Ivybridge Accountants