Buying an electric vehicle

With the continued increase in fuel prices more businesses and individuals are looking again at electric vehicles (EV). These continue to be tax efficient and the reliability and cost of these is improving making them attractive options.

There is often funding available for the installation of charging points but this is continuously changing and funds quickly close once they reach full capacity, so it is worth looking at these as soon as possible if they are of interest.  There are also interest free loans available in certain circumstances.  At present the following is available:

EV charging point funding for residential landlords:

Residential landowners Electric Vehicle Chargepoint Scheme – Energy Saving Trust

EV charging point funding for rural and third sector businesses:

Business chargepoint funding – Energy Saving Trust

Interest free loan for businesses buying a used EV:

Used Electric Vehicle Loan for Business – Energy Saving Trust

Interest free loan for individuals buying a used EV:

Scotland’s Used Electric Vehicle Loan – Energy Saving Trust

If our clients are considering changing their vehicle, they should contact us first so we can discuss the various options to ensure this is done as tax efficiently as possible.

In the meantime, the following is a summary of the key tax reliefs and benefits available for 2022/2023:

Buying an electric vehicle

Key tax reliefs and benefits 2022-2023

	Summary
Car	Capital allowances: 100% First-Year Allowance (FYA) on purchase of electric/zero emission cars. Gives full corporation tax relief for acquisition cost in year of purchase. Trade profits: For leased cars, no 15% disallowance where CO2 emissions are 50g/km or less. This means full corporation tax relief for rental costs as incurred. Employment taxes: Benefit in Kind (BIK) percentage as set out below: CO2 Range (miles) BIK 2022 – 23 onwards Zero n/a 2% 1-50 130 or more 2% 70-129 5% 40-69 8% 30-39 12% <30 14%
Van	Capital allowances: 100% FYA on purchase of zero-emissions goods vehicle. Alternatively, the 130% Super-Deduction or 100% annual investment allowance may be available. Employment taxes: 0% BIK for zero-emissions goods vehicle (otherwise, £3,600; £nil where insignificant private use).
Charge Points	Capital allowances: 100% FYA for the cost of installing plant and machinery for the purpose of charging an electric vehicle. Alternatively consider claiming the 130% Super-Deduction, or 100% annual investment allowance. Employment taxes: No BIK where charge point installed at workplace or the employee’s home.
Electricity	Employment taxes: No BIK on electricity provided through workplace charge point. Employment taxes: Advisory Fuel Rate (AFR) for electric car is 5p per mile. Usual AFRs apply for hybrid cars.