An electric car bought by a company touches three different taxes and only one of them is corporation tax. The capital allowance is generous, the running costs are deductible in the ordinary way, and the driver picks up a benefit in kind that is much lower than a combustion equivalent but is not nothing. This page separates the company's side from the director's.
The company's capital allowance
Cars are excluded from the annual investment allowance and from full expensing, so the treatment is one of three writing down routes. New zero-emission cars have attracted a 100% first-year allowance, relieving the full cost in the year of purchase, where a higher-emission car enters the special rate pool at 6% a year. On a £50,000 car that is £12,500 of corporation tax saved at the main rate in year one, against £3,000 of allowance in year one for the special rate alternative.
Running costs
Electricity, insurance, servicing, tyres and the cost of installing a charge point at the company's premises are deductible as ordinary business expenses in the usual way. Where the company reimburses a director for charging at home, the treatment depends on the arrangement and is a payroll question rather than a corporation tax one. The company's side of an electric car is, in short, unusually simple: a large first-year allowance and ordinary deductible running costs.
The driver's side, which this site does not compute
A car available for private use is a benefit in kind on the driver, calculated from the list price and a percentage set by emissions, and the company pays Class 1A national insurance on the same figure. Electric cars carry a much lower percentage than combustion cars, which is the other half of why they are attractive, but the charge exists and it rises over time as the published percentages step up. That is a personal tax computation and this site computes the company's liability only.
Questions people ask about electric car business tax
Can a company claim the full cost of an electric car?
New zero-emission cars have attracted a 100% first-year allowance, which relieves the full cost in the year of purchase. Cars are excluded from the annual investment allowance and from full expensing.
Are charging costs deductible?
Electricity, insurance, servicing and installing a charge point at the company's premises are deductible as ordinary business expenses. Reimbursing home charging is a payroll question.
Is there still a benefit in kind on an electric company car?
Yes, calculated from the list price and a percentage set by emissions. It is much lower than for a combustion car and it rises over time as the published percentages step up.