You can claim Corporation Tax Relief on the insurance premiums for your electric car, but it is considered a taxable benefit in addition to the car itself. Despite the benefit, it's generally still worth including the insurance as a business expense. Although you'll be taxed and pay employer's National Insurance (NI) through your P11D, you'll still save on employee National Insurance contributions.
This is because P11Ds fall under Class 1A National Insurance, which excludes employee National Insurance contributions.
You can claim Corporation Tax Relief on the cost of installing a charging point without treating it as a taxable benefit. Claiming the cost through the business is generally a wise decision.
This is a commonly misunderstood concept.
As the company owns the car, you cannot claim the standard mileage reimbursement of £0.45 per mile, as this applies only to employee-owned vehicles.
If there is a charging point at your workplace and the company pays for the electricity directly, you can claim Corporation Tax Relief without triggering any tax or National Insurance implications for benefits in kind.
Key benefit: Both business and personal journeys are paid for by the company tax-free.
If the employee pays for the electricity and gets reimbursed by the company, Corporation Tax Relief can still be claimed. However, this will result in a benefit in kind for tax and National Insurance purposes. The employer will need to pay tax and National Insurance on these amounts via payroll, and the employee should claim only the business portion of these electricity costs. As determining the business portion can be challenging, it's advisable to use the HMRC mileage rate of 8 pence per mile.
For more details, you can refer to this tool:
UK Government: Expenses and benefits - electric company cars
Maximise your savings and optimise your business expenses by correctly handling your electric car's insurance and charging costs. Ensure you're making the most of the available tax reliefs and benefits.
If you have any questions or need further assistance, contact us today!
