Chris Downing, Director of Inspire, the business and tax advisers, answers your questions.

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I’ve heard that there’s still tax savings to be had on electric cars

There’s a lot of talk currently about businesses acquiring electric vehicles – and this is certainly being encouraged by the government, with the move to electric-only vehicles being sold by 2030.

Aside from the considerable environmental benefits of running an electric company car vs petrol or diesel, there’s also significant taxable benefit in kind savings to be had at the moment too.

From April 2020 employees have been taxed at 0% on their fully electric company cars and this will last until 5 April 2021. The Treasury has confirmed that these rates will increase by 1% & 2% for tax years 2021/22 & 2022/23 respectively and are significantly lower than those applied to conventional fuel cars, which can be up to 37% of the value of the car, each year.

The company must also pay Class 1A National Insurance on the benefit in kind charge at a rate of 13.8%. Therefore, if this charge is nil or 1-2%, and if you’re running a fleet of cars, this can have also have a significant saving.

HMRC does not currently view electricity as a ‘fuel’ which means that any provision of electricity for private mileage (i.e. if the vehicle is charged at the office/workplace) is not seen as a benefit in kind and will not require any additional reporting on your behalf.  You can also check if you need to pay tax for charging an employee’s electric car.

You can read more details and our advice on the tax savings for running electric cars and vans in a recent blog by my colleague, Helen Fraser, here.

Is there any update on the Coronavirus support for my business?

There have not been any further announcements from the Chancellor since the beginning of January, determining support for business during the national lockdown. However, you can still take advantage of the following measures:

• Job Retention Scheme (furlough) has been extended until the end of April.
  • The government will fund 80% of wages, up to a maximum of £2,500, but the employer will still need to pay the National Insurance and pension contributions.
  • In order to qualify, employees will need to have been on a payroll RTI submission before 23.59 on 30 October.
  • Claims for furlough days in January 2021, must be submitted by 15 February 2021 (there’s a guide to all the claim dates here).
• Coronavirus Business Interruption Loans (CBILS) and Bounce Back Loans are still available and the deadline to apply for both of these has been extended to 31 March 2021. You can also benefit from updates to the Bounce Back Loan, including making interest-only payments for six months and pausing repayments entirely for six months
• Local authority support grants are also available if your business has been forced to close, or cannot trade in the same way, during the restrictions. You can find out more from Dorset Council and BCP Council on what’s available in your area.

Any idea of what’s going to be included in the Budget?

That’s what everyone wants to know – myself included! But with unprecedented levels of government spending to help fight the pandemic, the Chancellor is certainly under pressure to map out how and when the deficit will be repaid.

There have been warnings of potential changes to Capital Gains Tax, Corporation Tax and Stamp Duty and maybe some re-writing of the tax system altogether – but equally, it may be too soon to introduce any of these measures immediately, as the country continues to deal with the impact of the pandemic.  So, we may see an announcement of a programme of changes, but with the implementation delayed until later in the year.

Speculation is also high that there may be another extension to the Job Retention Scheme and the cashflow measures to support businesses.

We will, of course, be watching the Chancellor’s announcements very closely and will be hosting a Budget Update on Friday 5 March at 11am, to guide local business leaders through the changes.  You can find out more and register for the free webinar here.

You can register here to receive the latest business updates from Inspire.