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