Thinking of going green in 2021?

 As part of its green agenda the UK aims to end the sale of petrol and diesel cars by 2035. As encouragement the government recently announced that any business buying a zero or low emission car from April 2020 will get significant tax breaks.

 

So how does this work? Currently, company employees are taxed if they have the benefit of a company car, with a percentage of the cars list price having tax charged against it. This can be quiet painful for all concerned, however in an eyebrow raising move HMRC have slashed the benefit in kind tax percentage on low emission cars from 16% to 0%.

 

A model is classed as low emission if its CO2 is between 1-50g/km and will benefit from this 0% rate if purchased new after 6 April 2020. A zero emission car, irrespective of when it was registered, will have the 0% treatment from April 2020.

 

This means an employee with a zero or low emission car as a company vehicle will have more money in their pocket through tax saved. The company itself will also save money on its National Insurance bill.

 

It’s not just companies that can benefit. Sole traders and partnerships can also benefit by receiving 100% deduction against profits on the purchase price paid of any low or zero emission car, however any tax relief is reduced if there is any private use of the vehicle.

 

Going green is no longer a political or social issue, it now also saves you money!

 

Lentells are able to advise on all aspects of company car tax and benefits in kind.  Please contact your local Lentells office for more details;

Chard - 01460 64441, chard@lentells.co.uk 

Seaton - 01297 20584, seaton@lentells.co.uk

Taunton - 01823 286274, taunton@lentells.co.uk 

 

 

Blog post uploaded 21 Dec 2020