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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My client is wanting to buy a Tesla 6 which is a fully electric

Resolved Question:

My client is wanting to buy a Tesla 6 which is a fully electric car. It is on the IR website as a recognised electric car and has certain benefits but I just need to clarify them:-
1) It has 100% first year allowances ( are there any restrictions at all as the on the road price is £72k)
2) My client has been told that it is considered plant & machinery. If so ( or not), can the VAT be claimed on it
3) One assumes that there is still some benefit in kind, although I expect it to be considerably less than if there were any CO2s
4) I believe there is a reduction on the benefit in kind NI that the company pays which is at 5%
5) Anything else to consider?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.
Leave this with me for a bit and I'll get back to you with an answer.
Expert:  TonyTax replied 2 years ago.
Hi.
1 The cost of the car does not restrict the capital allowances that can be claimed under the First Year Allowances rules as long as it meets the criteria set out in Section 9 and in Table 3 on page 8 here:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdf
Look here for more information on First Year Allowances:
https://www.gov.uk/capital-allowances/first-year-allowances
https://www.gov.uk/capital-allowances/business-cars
2 VAT cannot be reclaimed on the car unless there is no private use. See paragraph 3.1 here:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdf
Try clicking on the third search result here for the definition of a car for VAT purposes (it may not work):
https://www.google.co.uk/?gws_rd=ssl#q=car+vat+reclaim+electric+car+hmrc
3 See Table 2 under paragraph 4.3 here for information on how CO2 emissions and the list price of the car are used to calculate the car benefit:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdf
4 Employer NIC is charged at 13.% on the calculated benefit in kind which itself is based on the CO2 emissions and list price of the car as set out in 3 above. There is no lower rate of Employer NIC for lower emission cars. Take a look here for more information:
http://www.nextgreencar.com/company-car-tax/employer-costs/
5 I think that about covers it.
I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
Thank you for your reply. My client has come back with ....it's not considered a car but plant & equipment therefore allowing the VAT ( whatever % that is) to be reclaimed.Any thoughts?
Expert:  TonyTax replied 2 years ago.
If he can point me at the source of that information, I'll be happy to comment further.
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