Question – what’s the difference between a Hyundai Ioniq Electric Premium Auto and an Audi e-tron 55 quattro? Put aside the £40,000 in price tag terms and, actually, they have more in common than you might expect. Both vehicles can qualify for the current generous tax treatment for low emissions cars and if you’re a company director thinking of a new car, this fact might well influence your choice.
Directors usually worry about high benefit in kind charges on company cars, with some cause. You could be taxed on up to 37% of list price every year so, if you keep the car for over three years you’ll pay tax on more than the value of the car. To add to the burden there is also employers’ NIC to pay on the taxable benefit of the company car.
However, if you buy the car personally and charge the company mileage you have other problems, not least that the cost of the car comes out of post tax income. So how do you solve the problem?
Possibly by looking at the electric vehicle market. If you can find a car with CO2 emissions below 50 gm/Km then the benefit in kind for 2019/20 is 16% of list price. For 2020/21 onwards the system is changing so that it’ll be possible to have a 2% charge for zero emissions vehicles and low emission vehicles with a range of 130 miles or more. Realistically, the current crop of hybrids is unlikely to meet that CO2 target so you need to be looking at a pure electric car, such as the Hyundai Ioniq Electric or Audi etron.
As an additional incentive, for the company, there is a 100% allowance available if the car has emissions below 50 gm/Km. The car must be brand new – not used/second hand. The company needs to own the car to qualify so, whilst it can be financed, a lease or contract hire arrangement that doesn’t give the company ownership won’t do it.
Whether you’re looking at the Audi or Hyundai end of the motoring spectrum, acquiring a new car will be a major purchasing decision and the question of whether to run the car through the company or acquire it personally adds another layer of complexity. If you’d like advice on the pros and cons of buying the car through the company please contact Clare Munro firstname.lastname@example.org