Somehow the start of a new year always gets us thinking about big plans and what the future might have in store for us. For me, on a practical level, this has meant thinking about the replacement of my car which is coming to the end of its PCP term and that got me thinking about electric vehicles.
I like to think that I have a relatively light touch impact on the planet and its resources and wildlife, but I drive a diesel and I put 15,000 miles on it every year, so I know I’m kidding myself. I also know there are many questions still to be answered on electric vehicles, in particular what we do with all the spent batteries, but it seems to me that going electric must be the most environmentally friendly option. It would give me brownie points with my wife too, which is never a bad thing.
Of course, there are all the questions about whether the charging infrastructure is in place, will the range be sufficient and what is the residual value going to look like. These are holding many people back from taking the plunge, but perhaps there is a middle way. It seems to me that a plug-in hybrid is currently the way to go. These give many of the benefits of an electric vehicle, without having to worry about range anxiety. Having said that, I still haven’t dismissed all-electric completely because there are some very attractive tax breaks available.
Obviously, being a tax adviser, once I had concluded on the general direction, I was then keen to understand in detail HMRC’s latest thinking on the taxation of cars. What I discovered was a complex maze of different rules and reliefs that apply in different circumstances and, being the peculiar type of animal that I am, this really piqued my interest.
There are complex new rules on the benefit in kind rates for electric and hybrid vehicles, which are partly dependent on the number of miles a hybrid can achieve on its electric motor alone. These benefit in kind rates really bring back into focus the attractiveness of company cars, with all-electric vehicles being BIK free in 2020/21, rising to 1% in 2021/22 and 2% thereafter.
For hybrids, the analysis is more complicated, so the only way to decide on the company/personal ownership question is to do the maths (not math – since when did this subject become singular?) and it won’t be simple maths!
Vehicle excise duty rates are becoming similarly complicated, with a high first year charge based on CO2 and whether petrol or diesel, followed by a lower flat rate thereafter. There is then a surcharge for cars with a list price greater than £40k and special rules for zero emissions cars. That’s just for cars registered after 1 April 2018! There are different rules for cars registered in 2017/18 and the old rules still apply for cars registered before 1 April 2017.
You can also throw in special rules for capital allowances on low emission cars and there is even an exception given to ultra-low emission cars in respect of the ability to use salary sacrifice arrangements. This could be very attractive to some employees (and their employers).
Then there are the rules relating to the installation of charging points and the use of company electricity by employees to charge their cars. The list of electric vehicle specific tax rules is seemingly endless.
We shouldn’t forget the availability of Government grants either. These are built into the list prices offered by dealers in respect of the cars themselves, but there are also grants available for the installation of charging points, both at home and at the office.
The Government seems to be throwing the kitchen sink at incentivising the move towards electric vehicles and I have to admit that I am very tempted…
Video Games Tax Credits 
Trusts, IHT and estate planning 
Exit Route Planning 
Corporate tax 