So today, I want to talk to you about why you should definitely be thinking about getting an electric car through your business. So traditionally, when you got a car through your company, you can actually put the car through your company as an expense. So it would lower your company profits and would lower your corporation tax bill. And also, you wouldn’t have to take the money out of your business to pay for the car personally, so it also lowers your dividend tax bill.
So the challenge with that system, though, it was depending on what kind of car it was, especially diesel and petrol cars, the government would then say, “Actually, you’re getting a benefit from your company, which instead of getting a salary from your company. So we’re going to tax it like it is a salary.” Not exactly the same, but almost. So the government would then have company car tax charges.
The problem with these were the company car tax charges weren’t essentially based on the value of the car, they were actually based on CO2 in particular emissions of the vehicle. So you could have a really clapped out old banger, which was worth barely anything, but because it’s spewing out carbon dioxide, quite rightly it was massively penalized by the tax system and you would end up paying a lot more tax than it saved your company. So it was never really worth putting that kind of car through your business.
But recently, because of changes in government policy and the move towards electric cars, the government is trying to encourage business owners to buy electric cars, like Teslas and other electric cars as well, by saying, “Well, actually you can put it through your business. You can put it through and get the tax saving on your business. But the company car tax we’re going to charge you is incredibly low. In fact, it’s like 1% of its value, and then it’ll go up to 3% over time.”
So what’s happening now is people are in a position where actually they can get their company to buy an electric car for them. Also, plug-in hybrids aren’t too bad, but electric cars are really where you get this tax saving. And the company will then pay for it or get this tax saving. These business owners will then get the car tax free. And in some cases, depending on your tax rate, it’s almost like the government giving you 50% off that car and paying half that car for you because in certain cases, if you lease especially, you can get half the VAT back as well. So the tax savings are absolutely awesome. So you should definitely think about going electric if you’re looking to renew your car. Also it’s good for the environment.
So if you want to find out about this or anything else, then get in touch. And more importantly, talk to us about how we can support your business. So we have our signature system. It’s our signature AAA system called Apex. And what it’s designed to do is get your business working for you rather than the other way around. So even though company cars are cheaper, when you put them through the business, we’ll make sure you can definitely afford it. So get in touch, book in a game plan session, and we’ll show you exactly how it works.