You can now save thousands of pounds in tax by driving a Tesla company car.
If you have a company car for personal use, you’ll know all about the Benefit in Kind (BiK) tax.
The BiK system ensures that if a company offers you a car in place of payment, you still have to pay tax on the car as an equivalent of income tax.
Let’s say you’re in the 40% income tax bracket. If you’re driving a mid-size diesel saloon with a £35,000 list price, you could be paying around £300 BiK tax a month.
But if your company signs up to the Tesla scheme – aimed at getting more electric cars on the market – you won’t pay any BiK tax at all.
Like all electric cars, Tesla’s zero-fuel-emissions cars enable unfettered access to London clean air zones and exemption from congestion charges (subject to registering the car on-line with Transport for London).
Financial benefits of the Tesla scheme
In order to incentivise companies to choose electric cars, the Office for Low Emission Vehicles (OLEV) offers a purchase subsidy (the ‘Plug-in Grant) of £3,000 on all vehicles worth under £50,000.
First Year Allowance
By choosing a new electric company car, your company can set the full cost of a car against profits in the year of purchase – known as a 100% First Year Allowance.
In its March 2020 UK Budget, the Government announced that the 100% FYA for businesses purchasing low emission cars will be extended until 31 March 2025.
0% Benefit in Kind rate
During the 2020-21 tax year, all Tesla cars will be eligible for 0% BiK rate. Tesla has published a comparison chart so you can get an idea of how much you would save if your company car was replaced by a Tesla.
If you have your own business or are employed by a company, it’s worth looking into the benefits of a fuel-efficient, tax-efficient car – not to mention choosing a brand that has all sorts of other plus points…
Patrick has been advising on tax for over 35 years, first as a solicitor and latterly as a barrister. This experience has given him expertise in helping businesses negotiate the complexities of HMRC investigations. As a barrister, he represents companies in appeals against HMRC, and can offer advice on conditions and exceptions that could save you money.
For tax advice and representation with one of the UK’s leading specialist tax advisers, please contact Patrick Cannon here.