Electric cars are now tax efficient again!
After initially being very tax efficient, recent Governments have been making electric cars less tax efficient.
The benefit-in-kind taxable percentages rose from 5% in 2015/16 to 16% in 2019/20. So, for 2019/20, a director/employee has to pay tax (and also employer’s national insurance) on 16% of the list price of the electric car – 3 times what it was for 2015/16 – so no longer looking so tax efficient – although they still reduced taxable profits by the cost of the car in the year of purchase.
However, from 2020/21 the benefit in kind percentage drops to 0% – and it will be 1% in 2021/22 and 2% in 2022/23. This is very good news for the electric car industry (particularly given the expected recession), and for any business owner looking to have an electric car.