Going electric could save you money and there is a real emphasis on going green, with the likes of Porsche, BMW, Range Rover, Mercedes and Tesla releasing new, electric vehicles in 2019.
So, how will going green affect your tax bill? Here’s a good example.
Let’s take a look at the Range Rover. If, as a 40% taxpayer, you have a Range Rover Sport 3.0 SDV6 with a list price of £72,800, the personal tax over three years (assuming the rates stay the same in 2022) will be £32,323.
Compare this against the newly released electric Range Rover Sport P400e PHEV with a list price of £72,000. This would cost you £16,416 in tax – almost half the amount of the SDV6 version.
Here are the tax benefits of electric company cars:
Benefit in kind tax: Company cars are taxed as a benefit in kind on top of your salary, i.e. a perk – so directors and employees of limited companies have to pay tax on them personally. Cars with higher carbon dioxide emissions are taxed more heavily than those with lower emissions. Also the company has to pay National Insurance on the benefit in kind.
There’s no difference in 2019/20 between low emission petrol cars and electric or hybrid cars, but from 2020/21, the more miles a car can travel using electricity, the lower the benefit in kind tax will be – dropping to just 2% from 2020/21 for fully electric cars and hybrids with an electric range of more than 130 miles.
Road tax: There is no road tax on completely electric cars with a list price of less than £40,000, and road tax on hybrid cars is lower than that of petrols and diesels.
Capital allowances: If you buy a car with carbon dioxide emissions of 50g/km or less, you can claim tax relief on 100% of the cost, plus the cost of installing a charging point for the vehicle.