BUSINESS VEHICLES, GOVERNMENT GRANTS & CAPITAL ALLOWANCES

 

The tax reliefs available to businesses and individuals purchasing low emission hybrid and plug in vehicles have undergone some recent changes that may well affect your choice of vehicle.

 

The good news for businesses and companies is that they will still get tax relief on 100% of the cost of new low emission cars (under 75g/km) and commercial vehicles, they are free of road fund tax and can be registered with TFL for exemption from congestion charges, and the over-all cost per mile can still be as little as 2p. For low business mileage drivers, it is now cost effective to have a qualifying company car.

 

There are generous government grants available against the cost price of certain vehicles as detailed below and on this link - https://www.gov.uk/plug-in-car-van-grants/print  Also, qualifying vehicles obtain a 100% capital allowances write off in the first year, worth a further 20% cash discount (tax relief) from the vehicle purchase price for a corporate buyer and  up to 45% for  self- employment/partnership businesses.

 

HYBRID/ ELECTRIC CARS - The maximum government grant has been reduced to between £2,500 and £4,500 towards the cost of the car (new vehicles only), and is dependent on C02 emission level (maximum 75g/km) and the zero emission range (minimum 20 miles). Your car retailer should be able to advise you of these figures for each vehicle.

In addition to this you will not get any government grant for cars with a RRP over £60,000 unless the emissions are under 50g/km with a ‘zero emission range’ of 70 miles or more. This will mean that vehicles such as the BMW i8 and Mercedes-Benz S500 Hybrid will not qualify for a government grant after 13/10/2016.  The gov.uk web page ‘Plug-in car and van grants’ (see link above) carries a non-exhaustive list of vehicles currently eligible for government grants.

 

VANS -For van purchases from 13/10/2016, a government grant of up to £8,000 is available for new vans with emissions under 75g/km and a ‘zero emission range’ of up to 10 miles.

 

MOTORCYCLES & SCOOTERS which are new and low emissions, can obtain a government grant of up to £1,500.

 

ELECTRIC PLUG IN POINTS

A business or company can obtain a government grant of up to £300 per charge point on the business premises, and multiple grants are available for multiple points. An individual can obtain a government grant of up to £500 per charge point installed at their residence.

 

AVAILABLITY & CASH FLOW

These types of government grants are usually available each tax year until the set government budget for that year has been used up, so if you are considering investing in a new vehicle you may want to act sooner rather than later. To maximise the capital allowances cash flow benefit, it is better to purchase the new vehicle in the last few months of the corporate business’s  trading year or for self-employments & partnerships, in the January to March period.