Want a car, pay no tax on personal use, claim 100% tax deduction and no taxable company electric cars benefit in kind HMRC 2020?

Government has announced that a fully electric company car with zero emissions will carry zero Benefit in Kind, personal tax and claim 100 per cent tax deduction from 2020/21 for the business. It is great news of no taxable company electric cars benefit in kind HMRC 2020 for employees and directors, business owners and for those who want to purchase a new car.

As company electric car not only carry huge tax savings for employers or directors and owners but also produce less harmful emissions that are beneficial for the environment in reducing the issues of poor air quality and effects of climate change.

Electric car tax UK: Comparison between HMRC company car tax rates 2019/20 and 2020/21:

If employees and directors are provided brand new electric car during the year of 2020/21 by business owners and they use it for their personal use as well, the Benefit in Kind rates increase because Benefit in Kind depends upon the P11D form of employees that consists of percentage of list price of newly branded car, any operational extras fitted, delivery fees, VAT and level of CO2 emissions and additional benefits that company electric car drivers get from it. Electric car with lower emission carries lower taxable HMRC Benefit in Kind rates 2020/21, personal tax and huge national insurance savings as well as compared to an electric car with emissions above 165g/km that will carry 37% taxable HMRC Benefit in Kind rates in 2020/21.

For example, full electric company car with zero emissions, has list price £ 35,296 and registered from April 2020 will carry:

  • 0% HMRC car tax rates 2020/21,
  • that will increase to 1% in 2021/22 and
  • 2% for the year of 2022/23.

 On the other hand, if it was registered before 2020, it would carry 16% HMRC car tax rates 2019/2020 that will reduce to 0% in 2020/21 and increase to 2% Benefit in Kind (BIK) rates 2020/23.

Government grant and Capital allowances on Purchase of brand-new electric car:

If the businesses have a brand new fully electric car with zero emissions and use it privately as well, they will qualify for 100% enhanced capital allowances and government grant as well that is £3,500 (maximum) on the first purchase of the car. The dealer deducts this grant from the purchase price of an electric car with zero emissions as grant depends upon the car model and level of emissions.

There is a list of brand-new best electric cars that have 100% enhanced electric allowance, low emissions and carry zero BIK rates including VW e-Golf, valvo v60/XC90 PHEV, Mercedes PHEV, Audi e-Tron A3 or Q7, BMW e-range and some more.

Accountant near me: Get Tax Assistance of HMRC car tax rates  for the purchase of an electric car:

If you run a business or limited company and want to get assistance on car allowances or HMRC car tax rates, our team of accountants for limited company provide a wide range of professional accounts, taxation, personal tax, business advisory and support services and others more services on business and individual level. Should you wish to book an appointment to get advice from our expert’s accountants near you please click here.