If you are the director and owner of a limited company and have been thinking about ways to save tax there is something you should know.
From April 2020 in the new tax year the benefit in kind (BIK) rate for electric cars is 0%. That means if you buy yourself an electric car as a company car you and your company will get several tax benefits.
A zero BIK rate means that you will not pay any personal tax, also your limited company will not pay any national insurance.
Furthermore, depending on how the vehicle is purchased, the company may be entitled to some great capital allowance claims. For example, if you buy the new Tesla Model 3 for £40,000 through the company you may be able to save £7,600 of company tax!
And you will be able to reclaim the VAT if you are VAT registered.
As an added extra bonus, you can also get 4p mileage claim for using your electric company car on business journeys.
On top of the tax benefits there are various other financial incentives out there. With all these sweeteners adding up, it makes sense to look at buying an electric car from April next year.
One thing to keep an eye on is how the BIK percentage changes in coming years as it is set to change. You should also speak to your accountant who will know your personal circumstances and understand if an electric car is right for you.