Should you wish to Purchase an Electric Vehicle in your limited company, the below tax advantages apply.
Benefit in Kind
Benefit in Kind is a tax charge on an Employee or Director when they have use of a company vehicle.
It is calculated by taking the Original Market Value of the Vehicle and Multiplying it by a % depending on the type of vehicle and mileage. The top rate is 30%
For Electric Vehicles BIK is 0% where:
(i) Original Market value is €50,000 or less
OR
(ii) You have use of car between 10/10/2017 and 09/10/2018
If neither of above are applicable to you, then you will only get partial exemption, i.e. you must reduce the OMV (Original Market Value by €50,000)
BIK Examples
Claiming Tax relief on Purchase Price of Electric Vehicle
Where a vehicle is purchased through your limited company you may claim tax relief on the cost of the purchase.
However, for passenger vehicles including Electric cars this is restricted to €24,000.
Normally you write of 12.5% per annum over 8 years, i.e €3,000 per annum.
With Electric Vehicles you have to option to accelerate the write off, this would mean claiming the full €24,000 in year 1.
Examples
The balance of €16,000 is not treated as an allowance against corporation tax.
You can still use company funds to pay the full €40,000, however you will have a Corporation tax charge of €2,000 (12.5% x €16,000) in year 1 and zero Corporation tax in following year
Lease or Buy
Should you lease a vehicle the lease costs will be written off over the term of the lease whereas if you Purchase outright it will be written off as above. The €24,000 limit still applies. In the case of Electrical Vehicle, it may be more efficient to purchase outright or through normal loan.
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