f you wish to purchase an Electric Vehicle through your limited company, the below tax advantages will apply.
Zero 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 (OMV) of the Vehicle and multiplying it by a precentage depending on the type of vehicle and mileage. The top rate is calcaulted at 30% . For vehicles purchased before Dec 2019 the reduced BIK will apply up to December 2021. This is expected to be extended in Budget 2020
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)
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
BIK Example Calculation OMV: €80,000 - €50,000 = €30,000
BIK: €30,000 X 30% = €9,000
PAYE/PRSI/USC: €9,000 X 52% = €4680
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 off 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
Option 1: You can write off (€23,500*12.5%) €2937 per annum
Option 2: You can write off €23,500 in full in year 1 thus benefitting
Electric Car purchased in 2019 for €40,000
Option 1: You can write off (€24,000*12.5%) €3,000 per annum
Option 2: 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 the 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 a normal loan.