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Discussion Starter #1
I’m hoping someone can help me
i am about to order a new electric company car for myself and I’m a director of the business, if I was to have a second electric car would both be eligible for 0% BIK from April ?

the company is based in the uk and basically it would provide me and my wife with 2 vehicles that were paid for pre tax out of my salary (my Salary would reduce to cover the cost of the vehicle) so would be cheaper than me leasing a car privately as would be paid out of gross rather than net earnings

over the year i would actually use both for work


has anybody any experience with this?

cheers
Dan
 

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Yes, I've done it (only one car though). If the car is for your wife then she would need to be part of the business (director, employee, etc) - you will need to submit P46(CAR) form to HMRC.
HMRC has actually good webinar to cover company cars. It explains how to calculate the value of the car.
 

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Discussion Starter #3
Cheers pal

as an electric car has bio BIK from April there would be no value
i have spoken with hmrc and our comapany tax advisor today and I’m awaiting confirmation

if needed i will employ my wife pay her a small salary and give her a company car

regards
dan
 

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You still have to provide value of the car. You will just pay no tax on BIK
VAT is not reclaimable if this is for employee use and parked on your drive.

But is it still very good deal to purchase the car this way: to buy 40K car personally you would need to earn about 77K pre-Tax (-19% CT and then -32.5% Divi Tax). But 40K car will cost your company 32.4K of net profit.
 

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100% year one allowance allows you to treat it as a business expense in the year of purchase. BIK from next year is 0%, but is currently 16% for pure EV. So this year, assuming you buy around December 6th (ie, 5 months in this tax year) you will pay BIK

P11D price (which exludes EV grant) X 16% * 5/12

So on a £50k LRM3

50,000 x .16 * (5/12) = £3,333 (so if you are taxed at 20%, this costs you £666 for 2019/20)

I believe that your company will need to pay class 1A National Insurance at 13.8% of the BIK too, so the company will pay 13.8% or £3,333 = £460.

Regards, J
 

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Discussion Starter #8
Hi Guys

just to you know as may be of interest
I have spoken today with our chartered accountants (who also specialises in personal tax) and HMRC

there is absolutely no reason why I (or you) can’t have multiple company cars and if they are electric both would come with the massive perks on offer in April 2020

so today I have confirmed the order of both vehicles (one I have chosen to get April 6th so would be 0%BIK, and the second car is on a long lead time due to build slots so prob sept-Dec 2020
So would have one electric car and then a second 6m later

loosely here are the savings (I know the figures may be slightly out but a guide)

example for a lease

Electric car costing £1000pm inc vat
-19% (corporation tax)
-10% vat (can claim 50% of vat)
-13.8% (employers NI)
-42% (income tax assuming higher payer)

= £471pm nett cost to me per month in 2020/21

if you are a lower tax earner or offset a divided the saving would be different

I’m told if you reduce your salary for a company car this could be classed as salary sacrifice and liable for BIK

2021/22 would be a bit more as 1% BIK and company would pay some NI
2022/23 would be 2%


it’s a massive perk for me as I currently lease another car that Im paying for out of my nett income so could get a far better car for the same real cost

hope this is of help to someone else

Dan
 

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It's a huge saving for company owners/those who can salary sacrifice. Don't forget the company can/should pay for your running costs including insurance and you will see a similar saving there. Also the company can charge your car for you as well.
 

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Discussion Starter #10
It’s not just a 2 car perk it’s a great perk for anyone currently running a personal car, you could end up with a better can for less money
 

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Whilst the benefit on an electric company car will be 0% (so technically it is still a BIK), 1% in 2021/22, 2% 2022/23, the legislation hasn't been updated for the fact that electricity is now fuel for a vehicle. Currently there is no cost to the vehicle user for company electricity. Businesses also get an OLEV grant of £500 per installation point.
 

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Whilst the benefit on an electric company car will be 0% (so technically it is still a BIK), 1% in 2021/22, 2% 2022/23, the legislation hasn't been updated for the fact that electricity is now fuel for a vehicle. Currently there is no cost to the vehicle user for company electricity. Businesses also get an OLEV grant of £500 per installation point.
Not quite, HMRC have provided specific guidance on this:

 

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As I say, it doesn't have any bearing on what I posted. If you're going to comment and suggest something is wrong then you need to post in more detail. Otherwise you confuse those reading :)
 

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As I say, it doesn't have any bearing on what I posted. If you're going to comment and suggest something is wrong then you need to post in more detail. Otherwise you confuse those reading :)
I was referring to this comment:
Whilst the benefit on an electric company car will be 0% (so technically it is still a BIK), 1% in 2021/22, 2% 2022/23, the legislation hasn't been updated for the fact that electricity is now fuel for a vehicle. Currently there is no cost to the vehicle user for company electricity.
Which part of section 7 of the HMRC guidance is confusing or has no bearing on this?
 
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