Its still possible to claim 100% tax allowance for electric vehicles
First Year Allowances (FYA’s) are available for expenditure on new unused electric vehicles and other cars within the threshold for low CO2 emissions. Businesses can claim FYA of 100% in the year they purchase qualifying low emissions or electrically propelled cars. These measures were put in place to help encourage the use of low emission and zero emission vehicles.
The FYA’s for businesses purchasing low emission cars are available until 31 March 2021. The emission threshold below which cars are eligible for the FYA is 50 gms/km. The 50gms/km limit had been higher prior to 1 April 2018 but was reduced as car manufacturers reacted to the growing demand for lower emission and electric cars and developed new clean air technologies.
The FYA allows companies to set the full cost of these qualifying cars against their tax bills in the year the cars were purchased. The FYA is only available on the purchase of new cars, second-hand cars do not qualify for FYAs (but can claim writing down allowances). If claiming the full amount of FYA would create a loss, it is also possible to claim less than the full 100% FYA and claim the balance using writing down allowances.
There is no doubt that taking advantage of tax concessions to promote sustainable technologies as the world reacts to the growing awareness of climate change issues will increase in years to come. If you are considering changes to your business car(s) and need to consider the tax advantages for your company and the benefits tax charges levied on employees, please call, we can help.