Should you wish to Purchase an Electric Vehicle in your limited company, the below tax advantages apply.
Benefit in Kind(BIK)
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 and the top rate is 30%.
For Electric Vehicles BIK is 0% where:
(i) Original Market value is €50,000 or less
(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)
Electric Car purchased new with OMV of €40,000 – BIK = 0
Electric Car purchased 01.01.2018 for €100,000 – BIK = 0
Electric Vehicle purchased 01/01/2019 for €80,000
OMV = €80,000 - €50000 = €30,000
BIK = €30,000 X 30%* = €9,000
PAYE/PRSI/USC = €9,000 * 52% = €4,680
*we assume highest rate of BIK and highest rate of Personal Tax
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.
Electric Car purchased in 2019 for €23,500
(i) You can write off (€23,500*12.5%) €2937 per annum
(ii) You can write off €23,500 in full in year 1 thus benefitting
Electric Car purchased in 2019 for €40,000
(i) You can write off (€24,000*12.5%) €3,000 per annum or
(ii) You can write off €24,000 in full in year 1
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.
If more information, please contact firstname.lastname@example.org or call +353 (0)1 8077106