Electric Car Depreciation: What You Need to Know

Tax Advantages of Leasing an Electric Car for Business

The UK government offers a number of tax incentives for businesses that lease electric cars. These include:

• Lower Benefit-in-Kind (BiK) tax: The BiK tax is a tax that businesses pay on the value of a company car that is provided to employees. For electric cars, the BiK tax is just 2%, which is much lower than the BiK tax for petrol or diesel cars.

• Full VAT recovery: Businesses can recover the full amount of VAT on the lease payments for an electric car. This is not the case for petrol or diesel cars, where businesses can only recover 50% of the VAT.

• Capital allowances: Businesses can claim capital allowances on the purchase price of an electric car. This means that they can deduct the cost of the car from their profits before they pay tax.

Disadvantages of Leasing an Electric Car for Business

There are a few potential disadvantages to leasing an electric car for business, including:

• Limited range: Electric cars typically have a shorter range than petrol or diesel cars. This may be a problem if you need to travel long distances for business.

• Charging infrastructure: The charging infrastructure for electric cars is still developing. This may make it difficult to find a place to charge your car if you are on the road.

• Depreciation: Electric cars tend to depreciate more quickly than petrol or diesel cars. This means that you may lose more money if you sell the car early.

New Data on Electric Car Depreciation

New data from Carwow reveals that electric cars have lost an average of one-third of their value in the past six months compared to just 0.5% for petrol vehicles. This is due to a number of factors, including the rising cost of battery materials and the increasing availability of new electric car models.

Overall, there are both advantages and disadvantages to leasing an electric car for business. The best option for you will depend on your individual circumstances and needs.

If you are considering leasing an electric car for business, it is important to weigh the tax advantages and disadvantages carefully. You should also factor in the limited range, charging infrastructure, and depreciation of electric cars.

If you are still unsure about whether leasing an electric car is right for you, it is a good idea to speak to a financial advisor or tax accountant. They can help you to assess your individual circumstances and make the best decision for your business.