You will pay company car tax for the company providing you (the employee) a company car. This is known as Benefit in Kind (BIK) calculations.
Let's take an example - a TESLA MODEL Y HATCHBACK Long Range AWD 5dr Auto in metallic Midnight Grey paint and black 20” Induction Alloys - this car has a list price of £61,190.00 - as it includes the first registration fee of £55 you deduct this amount as it does not form part of the company car tax, so that leaves an amount of £61.135 (this is your P11D value).
The P11D value does not change during the life of the contract unless you add on other extras, the likelihood of this is very low, so in this Tesla example, the car will remain at £61,135 throughout the contract term. Even if an employee leaves the business and the car is reallocated to another employee around one year into the contract, the P11D value is still the same ie the car is never calculated on it's used value into the contract term.
The HMRC has set out the company car tax tables for the current tax year of 2022/23 and also 2023/34 up to 2024/25 - if you drive a full electric vehicle your benefit in king percentage is set at 2% of all of these financial years. So we take 2% of the P11D Value of £61,135 = £1222.70 ...this is the car 'benefit in kind'.
If you are a 20% tax payer you then multiply the car benefit in kind amount of £1222.70 by 20% = £244.54 per annum, or divide by 12 to get the monthly tax amount of £20.38 per month. Yes, that's £20.38 company car tax for driving a £61,190 electric car.
If you are a higher rate tax payer of 40% this amount doubles and works out at £489.08 per annum or £40.76 per month. Not bad value at all.
Personal allowance - this is the amount we get from the HMRC every year that we can earn our first earned money at a tax free rate. For 2022/23 it is £12570. Now if you take the Tesla example above, you have a benefit in kind of £1222.70.
So £12570 less £1222.70 = your first £11347.30 can be earned tax free.
March 23 - if you are interested in a Tesla Model 3 or a Tesla Model Y we have stock offers on Model 3 Performance and Model Y Long for March 23 delivery - subject to availability. Get in touch 028 9693 6363.
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