Electric cars will be far more desirable as company vehicles after April 2020, when the benefit in kind charge reduces to zero on a fully electric vehicle. As a result, it’s probable that many more will become company vehicles.

The increased interest is creating several areas of doubt, the main one of which revolves round VAT.

Despite reports we have heard from various car dealers, the VAT situation is the same for electric cars as any diesel or petrol car.

VAT cannot be recovered unless the car meets one of the exceptions detailed below:

• is stock and you are a motor manufacturer or dealer.
• will be used primarily as a taxi, for driving instruction, or for self-drive hire.
• will be used exclusively for the purposes of the business and not be available for any private use.

If your electric cars fall into the latter category, there are some steps that MUST be taken to prevent HMRC arguing against your classification. If they do and you cannot prove the point, it can prove extremely expensive!

Speak to us to find out more. If you’re unsure how to purchase your next vehicle, please get in touch. The rules are complex and it is always best to check your particular circumstances before making a purchase.