Questions concerning electric vehicles continue to be among the most frequently asked to RNS partners and colleagues.
The Government has continued to incentivise the investment in EVs. It has been consulting on a manifesto commitment to restore the 2030 phase out date for new purely petrol and diesel cars.
Previously, the target date had been pushed back to 2035.
RNS partner Alex Douglas said: “Changes have made an impact on the cost of owning an electric vehicle, such as the introduction this month (April) of Vehicle Excise Duty.
“But the Government continues to incentivise investment in EVs, which has kept the EV discussion at the forefront of personal and company decision making.”
Capital allowances
New electric cars with zero CO2 emissions will continue to be eligible for 100% first-year capital allowances.
This was extended by the Government last Autumn until 31 March, 2026, for Corporation Tax purposes and 5 April, 2026, for Income Tax purposes.
Second-hand electric cars with zero emissions and hybrid cars (new or second-hand) with CO2 emissions of 50g/km or lower are eligible for 18% Writing Down Allowances.
Charging points
Electric vehicle charging points are eligible for 100% First Year Allowances.
Their availability has been extended in line with buying an EV.
Benefit in Kind
Normal Benefit In Kind rules apply to electric cars and vans provided to employees.
The rates of tax depend on the level of CO2 emissions.
For pure electric cars with no CO2 emissions, the rates are:
- 2% of the list price for 2024-25.
- 3% of the list price for 2025-26.
- 4% of the list price for 2026-27.
- 5% of the list price for 2027-28.
There is no benefit in kind on installation of home charging point.
Likewise, there is no benefit in kind on a company provided charging.
VAT
Normal rules for VAT recovery on the purchase or lease of a vehicle apply:
- VAT cannot be recovered on electric cars unless they are not provided for private use.
- 50% of the VAT can be recovered on leased cars.
- VAT can be recovered in full on non-leased commercial vehicles assuming no private use.
- VAT can be recovered on electric vehicle running costs such as repairs and vehicle excise duty where it applies.