As a car loving accountant, this is a subject close to my heart on two counts; great cars and low tax!
In the next tax year (2020/2021) having a company electric vehicle will become much more attractive. The Benefit in Kind (BIK) charge will drop to 0% and only rise to 2% in tax year 2022/2023. What does this mean in the real world? A Porsche Taycan costing £100,000 would give you a benefit of only £2,000 per year, which means a tax cost of £800 as a 40% tax payer. Compare this to a petrol or diesel car costing the same price, and the actual cost saving could be £13,000 plus per year.
In addition the employer can claim 100% capital allowances on the car reducing the net price in year 1 to £81,000.
As an extra bonus the supply of fuel, electricity, may be provided tax free as well.
Win, win, win!
There must be downsides, surely?
Range (the distance the car can travel on a full charge) is the most important from a practical point of view. The market leader is the Tesla Model S which boasts a range of up to 375 miles! The Taycan, however, has a range of around 200 miles in real life and can be charged from 5% to 80% in 22 minutes. This makes driving it to the airport for your holiday, or to that long-distance, out-of-town business meeting a realistic proposition.
Some worry about the battery life or the changes in this rapidly developing field of technology affecting depreciation, but rest assured, there are great warranties on these cars. Or, as an alternative, why not lease and let someone else take the risk?
As a keen devotee of all things automotive I think the key step change is that these cars are now good to drive, offer performance, and give quality that compares to, and in some cases beats, the best petrol and diesel sports / luxury cars.
Enough of the high end vehicles; the market has some great less-expensive cars that also attract the 0% BIK charge, but look out for range and charging times as they may not be as practical.
Give us a call to run the numbers for you, you can have a great car, low tax and help the environment.