insideKENT Magazine Issue 42 - September 2015 | Page 151
BUSINESS
DRIVING
ELECTRIC
DREAMS
Paul Nixon, Partner
ELECTRIC CARS CAN BE A BIT LIKE MARMITE, BUT IMPROVEMENTS
IN TECHNOLOGY HAVE MADE THEM A RELIABLE ALTERNATIVE
TO THEIR FUEL-DRIVEN COUNTERPARTS. NOW, THE TAXMAN
HAS OFFERED INCENTIVES AS A REWARD FOR THEIR LOW – OR
ZERO – CARBON EMISSIONS TOO.
If you choose an electric car as a company car,
there could be some benefits lying in wait for
you. First, they enjoy a much lower benefit-inkind cost, calculated at just 5%; a more traditional
vehicle comes in at 19%, which is nearly four
times as much.
Second, and even more advantageous, is the
First Year Allowance (FYA), which enables the
full cost of the car to be offset against profits
before a company’s corporation tax is calculated.
Take a Tesla, for example. Tesla is an American
manufacturer of low-emission vehicles and is
now making headway in the UK with fully electric
four-door saloons – the ideal company car.
Assuming a list price of £55,000, the 5% benefit
in kind would be just £2,750. For a petrol car
with average emissions of 124g/km that would
be £10,450.
The ability to offset the full £55,000 purchase
price could result in a corporation tax saving of
nearly £10,700 in the first year (once National
Insurance has been factored in). The comparable
saving on the average petrol car would be just
£826, as only 18% of the car’s purchase price
can be offset. Of course, with all the benefits
loaded into the first year, the petrol car will see
slightly better savings in subsequent years.
At Wilkins Kennedy, we have a team of experts
on hand to help you negotiate the corporation
tax rules and ensure you are making the most
of the allowances available. If you need some
guidance, why not give us a call?
151
Paul Nixon, Partner, Wilkins Kennedy
To find our more, email
[email protected]
or call on 01233 629255.
www.wilkinskennedy.com