By Mel Hackney

With taxes on the rise, now is a really good time to be thinking about where savings can be made. An employer supplying an electric car (which can be through a salary sacrifice) can be really tax efficient, particularly for an owner managed business.

If the employee is going to use the company car for private use (as most people do), they pay tax on this. With an electric car, the tax on the employee is very small. Currently the taxable benefit is calculated at only 2% of the list price of the car and the 2% rate is frozen until 2025.

So, for example, if an employee is given the use of a car with a list price of £50,000 and is a 40% taxpayer, the tax which the employee will suffer on this is only £400 per annum.

Not only that, but the cost of providing charging points at home and work, the cost of the electricity to charge at work, the insurance, and servicing of the car are all tax exempt on the employee.

The employer saves tax too as costs to the employer are all deductible against taxable profit, and so saving Corporation Tax plus National Insurance with a salary sacrifice arrangement. 

In addition to this, the government are currently offering eligible businesses grants towards the upfront costs of the purchase and installations of electric vehicle charge points to the employer. Details on this can be found here:

https://www.find-government-grants.service.gov.uk/

If you want to discuss further, give us a call!