Buying an EV through a business, new or used?
Discussion
VAT is largely irrelevant as very few companies can reclaim it if there is any personal use involved. (They can reclaim half the VAT on a lease).
As far as tax treatment is concerned, a used EV won't qualify for the 100% FYA allowance, (an ex demo car would qualify), but this may be a blessing in disguise as the allowance reverses on the eventual sale value, which effectively goes straight to the profit in the company, and if corp tax rates go up, you'll pay more to pay this tax then than you save now (obviously, every company is different and borrowing, cash flow etc may all be factors to consider). A used car you'd depreciate using normal car rules which are, I think 17% of the car value a year and offset that against tax instead.
After that everything else is the same.
Just think carefully if you do many business miles and/or charge away from home. The 5p/mile is tiny and won’t cover the costs, and while there are ways some are trying to get around that, it's not necessarily trivial or foolproof.
Also consider the actual savings through the company. Past deprecation isn't necessarily a guide to future depreciation, but EVs are holding their value well. The last 2 EV's I've owned over 18 months have gone up in value, but lets say they stayed the same, as I owned them I could claim 45p a business mile from the company, and didn't pay 2% BIK. If I sold them today I'd have offset nothing against company tax
As far as tax treatment is concerned, a used EV won't qualify for the 100% FYA allowance, (an ex demo car would qualify), but this may be a blessing in disguise as the allowance reverses on the eventual sale value, which effectively goes straight to the profit in the company, and if corp tax rates go up, you'll pay more to pay this tax then than you save now (obviously, every company is different and borrowing, cash flow etc may all be factors to consider). A used car you'd depreciate using normal car rules which are, I think 17% of the car value a year and offset that against tax instead.
After that everything else is the same.
Just think carefully if you do many business miles and/or charge away from home. The 5p/mile is tiny and won’t cover the costs, and while there are ways some are trying to get around that, it's not necessarily trivial or foolproof.
Also consider the actual savings through the company. Past deprecation isn't necessarily a guide to future depreciation, but EVs are holding their value well. The last 2 EV's I've owned over 18 months have gone up in value, but lets say they stayed the same, as I owned them I could claim 45p a business mile from the company, and didn't pay 2% BIK. If I sold them today I'd have offset nothing against company tax
Edited by Heres Johnny on Wednesday 21st September 08:07
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