Sole trader EV tax advantage?

[Qwerty911]

My wife and I both work full time but also have a modest but healthy sole trader business. My wife is also an employee of the sole trader business. What is the tax position if the business buys and supplies her with a 100% electric company car, with personal use, as part of her employment? Can the business claim full tax relief in year 1 on the purchase cost? and is she only liable for the applicable BIK?
Many thanks.

[anonymous-user]

You can offset whole purchase price as capital cost in year one. Not sure if you have to adjust for %age business use at outset or whether that is tallied up when you sell.

[clockworks]

Just a thought, but can a "sole trader" business have an employee?

[Mr Pointy]

clockworks said:

Just a thought, but can a "sole trader" business have an employee?

That stuck out for me as well. OP, I think you'll find your wife is a ST in her own right & you've just contracted her to do some work for you.

[Heres Johnny]

Agreed, the formal company, sole trader, limited liability partnership, partnership etc basis needs to be determined

If by chance it is a company that can claim 100% write down, don't get too excited, you pay back a chunk of it when you sell, you only get tax relief on the depreciation over the life of ownership not on the purchase price, and if corporation tax goes up, you may pay a higher % in the future than you're claiming relief on now.

[oop north]

clockworks said:

Just a thought, but can a "sole trader" business have an employee?

Of course it can - if the OP’s wife is paid a wage / salary that goes through PAYE (tax and nic deducted from pay above the appropriate thresholds) then she is an employee. So the assumption is the OP is the sole trade.

In fact this is quite interesting - if the OP and his wife were in partnership there would be j no real benefit in having an EV through the business; and you have to account for business proportion use. But a sole trader employing their spouse can stick an EV through the business. You would need to make sure that the cost of the salary plus car doesn’t exceed the market value of the work done, just as you aren’t supposed to pay someone £25k pa to someone doing a bit of admin for an hour a week - not a valid business expense

[clockworks]

oop north said:

Of course it can - if the OP’s wife is paid a wage / salary that goes through PAYE (tax and nic deducted from pay above the appropriate thresholds) then she is an employee. So the assumption is the OP is the sole trade.

In fact this is quite interesting - if the OP and his wife were in partnership there would be j no real benefit in having an EV through the business; and you have to account for business proportion use. But a sole trader employing their spouse can stick an EV through the business. You would need to make sure that the cost of the salary plus car doesn’t exceed the market value of the work done, just as you aren’t supposed to pay someone £25k pa to someone doing a bit of admin for an hour a week - not a valid business expense

Thanks for clarifying that.
I just googled it and "sole" refers to ownership of the business and it's profits and liabilities, not the number of people working in it.
Makes sense now.

Presumably, as well as the PAYE aspect, the OP would also have to sort out a pension for his wife? And things like sick pay, holiday pay, minimum wage compliance, etc.?

[Qwerty911]

Yes wife, plus 2 others employees are paid through PAYE payroll. We have 2 commercial vehicles which were 100% tax deductible in first year, but cars aren’t allowed that same treatment, but I’m trying understand if 100% electric only cars now qualify for full business tax deduction in first year. I assume VAT remains non claimable? The car’s use would be 50/50 work private, but assuming 0 or low BIK then it would make sense to get her an electric car?