Tax on electric cars
Since April 2020, electric cars have become very tax efficient. For example:
Buying an Electric Car (as Company car)
If you take £30,000 profit from a company to buy an electric car:
Car cost = £30,000.
Corporation tax = £0;
Income tax: Benefit-in-kind rate = 2% in 2023/24, so income tax and NI perhaps £323).
Buying Petrol/Diesel Car (as Personal car)
If you use £30,000 profit to buy a personally-owned fuel car.
Extra Corporation Tax in the company (at 19%) = £5,700
Take a £24,300 dividend. Then you must set aside money for higher rate income tax on the dividend (marginal rate: income tax/dividend tax 33.75% (2023/24) = £8,201
This leaves only £16,099 available for a petrol/diesel car.
Cash to HMRC = £13,901. This is about an extra £13,578 compared to it going through the company.