EV Discussion thread

JKenH

New law to make EV charging network 99% reliable

The UK’s electric vehicle rapid charging network will be required to have a 99% reliability rate and offer real-time status updates under new laws set to be introduced in the coming months.

The new Public Charge Point regulations, published in draft form, are intended to improve the charging experience for EV owners. Ministers hope the new regulations, which were first announced before a public consultation last year, will eradicate range anxiety and create a “world-class” charging grid.

The new rules set a minimum standard for public charge reliability of 99%, putting an emphasis on firms to ensure that units are durable and capable of constant use. At the same time, all chargers will be required to produce real-time data on their status, offering greater information to potential users.

https://www.autocar.co.uk/car-news/business-government-and-legislation/new-law-make-ev-charging-network-99-reliable

Exiled_Tyke

CKhalvashi said:

Exiled_Tyke said:

I'm surprised a personal lease can work out better than a business one.  The personal lease is paid for out of after tax income (and if income hasn't been taken out as dividends there would also be the NI costs to consider as well).  The business lease both allows for CT and VAT deductions but (a relatively small) amount of benefit in kind.  For me (not VAT registered currently) I worked out that an EV would be cheaper through my business.

The Ioniq was purchased outright with a decent discount.

The car has cost me around 8p/mile all in, excluding depreciation. The reimbursement rate for business mileage covers around 65% of the miles the car has done. It comes down to a reasonably cheap car vs the 9p electricity rate on the same mileage.

If the car is worth more than about £12k (a quick search shows it probably is), I'm so far better off with personal ownership. The car should become 'cost neutral' at about 140k miles.

Sorry to be difficult but I genuinely don't understand this.  If I buy an EV through the company then I get to write the whole thing off against tax as a first year allowance.   The benefit in kind rate is 2%. So a £40k car would come out £800 a year. Let's say I'm a 40% tax payer (but this really doesn't matter just give different figure). So tax on the £800 would be £320 a year.

If I decide to buy the car personally then I need to take these funds out of the business.  The most cost effective way to do this is as dividends.  Our higher rate tax payer pays dividend tax at 33.75%. So to have £40k to spend on the car I first need to take £60k out of the business and pay £20k of income tax on this.  If we assume it's a small company paying tax at 19%. then to pay dividends of £60k the company needs to make profits of £75 and pay £15k tax.    End result I personally own the car but the total tax burden is £35k of tax so the car has efectively cost $75k of pre-tax income.  Whereas if the company buys the car then it costs the business £40k and I suffer a £320 income tax bill each year.

If i've got this wrong then I'm sorry (and I've wasted a huge amount of time writing this out).

(And this is not tax advice in any way shape or form, anybody making similar decisions needs to take advice from someone who knows better than me!)

CKhalvashi

Exiled_Tyke said:

CKhalvashi said:

Exiled_Tyke said:

I'm surprised a personal lease can work out better than a business one.  The personal lease is paid for out of after tax income (and if income hasn't been taken out as dividends there would also be the NI costs to consider as well).  The business lease both allows for CT and VAT deductions but (a relatively small) amount of benefit in kind.  For me (not VAT registered currently) I worked out that an EV would be cheaper through my business.

The Ioniq was purchased outright with a decent discount.

The car has cost me around 8p/mile all in, excluding depreciation. The reimbursement rate for business mileage covers around 65% of the miles the car has done. It comes down to a reasonably cheap car vs the 9p electricity rate on the same mileage.

If the car is worth more than about £12k (a quick search shows it probably is), I'm so far better off with personal ownership. The car should become 'cost neutral' at about 140k miles.

Sorry to be difficult but I genuinely don't understand this.  If I buy an EV through the company then I get to write the whole thing off against tax as a first year allowance.   The benefit in kind rate is 2%. So a £40k car would come out £800 a year. Let's say I'm a 40% tax payer (but this really doesn't matter just give different figure). So tax on the £800 would be £320 a year.

If I decide to buy the car personally then I need to take these funds out of the business.  The most cost effective way to do this is as dividends.  Our higher rate tax payer pays dividend tax at 33.75%. So to have £40k to spend on the car I first need to take £60k out of the business and pay £20k of income tax on this.  If we assume it's a small company paying tax at 19%. then to pay dividends of £60k the company needs to make profits of £75 and pay £15k tax.    End result I personally own the car but the total tax burden is £35k of tax so the car has efectively cost $75k of pre-tax income.  Whereas if the company buys the car then it costs the business £40k and I suffer a £320 income tax bill each year.

If i've got this wrong then I'm sorry (and I've wasted a huge amount of time writing this out).

(And this is not tax advice in any way shape or form, anybody making similar decisions needs to take advice from someone who knows better than me!)

You cannot claim mileage allowances (at 45p/25p) on a company car. These rates are tax free for business travel and a deductible expense for the company.

A £27k-ish, owned outright, car costing 8p/mile to run (including insurance, servicing, consumables and electricity) is better run through personally for someone driving about 2000 business miles a month (I was paid just over £8k last year tax free in mileage allowances that is an allowable expense for the company) with a cost of about £2.5k to run including private mileage but excluding depreciation. This years reimbursement will be a bit higher, but the costs also a bit higher.

At company car reimbursement rates, I'd be down overall, even more so after paying tax on the BIK, however small that would be.

JKenH

Fleets warned of potential issues from sluggish retail EV demand

BVRLA director of corporate affairs Toby Poston said the contrast between the strong incentives being offered for electric company cars, and a total absence of such incentives for private buyers, would cause a 'negative loop' affecting residual values.

Speaking on a panel organised by communications agency Stand, on the subject 'Are we on the cusp of a mobility tipping point?', Poston explained: "When you look at the market, it's a two-speed market. The market I'm in, business fleets, we're already at about 70-80% of registrations being BEV. When you look at the retail market, it's much, much lower, and that's a problem.

"[The fleet market has] been pumped full of really strong tax incentives, and the retail market just doesn't have [those]. 

"The thing that worries me, is we're fast approaching that first wave of electric company vehicles about to hit the used market, and that's another retail market that has no incentives. It's traditionally a market where people usually buy a car for £10-15k, that's three years old - they are going to find that there is nothing that's electric. 

"And that's really going to imbalance the market with a real supply and demand scare, which will then feed back into the new market, because companies that rely on a healthy sale price for their used vehicles use that to set their residual values on the vehicles they're providing into lease or rent. And they are going to have to be a lot more conservative, so there is going to be a negative loop."

https://www.businesscar.co.uk/news/2023/july/fleets-warned-of-potential-issues-from-sluggish-retail-ev-demand

JKenH

Interest in EVs drops as cost of living crisis and rising interest rates hit

EVs have experienced the biggest drop in interest of the fuel types among buyers currently planning their next purchase.

JudgeService has reported that twelve months ago 15% of owners said they expected their next purchase to be an EV. However, this has now dropped to just 9%. While owners who plan to stay with EVs has also decreased year-on-year from 90% to 83%.

Hybrid buying intent also cooled, dropping from 17% to 15%, while plug-in hybrids increased from 5% to 7%.

However, owners intending to purchase a petrol model in their next buying cycle jumped from 32% to 48%, while diesel almost doubled from 9% to 17%.

https://www.motortrader.com/motor-trader-news/automotive-news/interest-evs-drops-cost-living-crisis-rising-interest-rates-hit-10-07-2023

JKenH

Article looking at the impact of Tesla’s price cuts on the EV market.

Tesla Price Cuts Tanked Both New and Used EV Prices, Other Industries Also Affected

Tesla shocked the markets with its price cuts operated in January. Many criticized the move, saying it would affect the company margins and existing Tesla owners because of a drop in value. When the first-quarter results were in, Reuters was so quick to show the price cuts failed that it completely missed the numberstelling sales increased. Still, the sudden change in pricing strategy proved a good move, at least for Tesla. It was a bloodbath for everyone else, though, and the consequences still reverberate throughout the automotive markets.

The most obvious change was that all other carmakers were forced to cut prices. This was brutal, considering that no legacy carmaker was making a profit from selling EVs. Now, the loss accelerated, making it a bad business to produce electric vehicles. While GM decided to build as few EVs as possible to minimize losses, Ford was surprised to see that its electric cars piled up on dealers' lotsuntil they no longer wanted to get new allocations. On the other hand, Volkswagen was forced to slash EV production significantly, blaming "customer reluctance" to buy EVs.

https://www.autoevolution.com/news/tesla-price-cuts-tanked-both-new-and-used-ev-prices-other-industries-also-affected-217970.html

JKenH

Meanwhile Tesla continues its expansion plans. 

Tesla Is Launching Phase 2 Expansion at Giga Berlin To Reach 1 Million EV Annual Capacity

According to the plans filed with Brandenburg Environment Ministry, Tesla plans to build another large production hall to house the additional production area. It will also optimize operations at its existing line to increase productivity. As part of the expansion plans, Tesla wants to double the capacity of its battery production facility from 50 GWh to 100 GWh per year.

https://www.autoevolution.com/news/tesla-is-launching-phase-2-expansion-at-giga-berlin-to-reach-1-million-ev-annual-capacity-217972.html

1961Nick

Exiled_Tyke said:

CKhalvashi said:

Exiled_Tyke said:

I'm surprised a personal lease can work out better than a business one.  The personal lease is paid for out of after tax income (and if income hasn't been taken out as dividends there would also be the NI costs to consider as well).  The business lease both allows for CT and VAT deductions but (a relatively small) amount of benefit in kind.  For me (not VAT registered currently) I worked out that an EV would be cheaper through my business.

The Ioniq was purchased outright with a decent discount.

The car has cost me around 8p/mile all in, excluding depreciation. The reimbursement rate for business mileage covers around 65% of the miles the car has done. It comes down to a reasonably cheap car vs the 9p electricity rate on the same mileage.

If the car is worth more than about £12k (a quick search shows it probably is), I'm so far better off with personal ownership. The car should become 'cost neutral' at about 140k miles.

Sorry to be difficult but I genuinely don't understand this.  If I buy an EV through the company then I get to write the whole thing off against tax as a first year allowance.   The benefit in kind rate is 2%. So a £40k car would come out £800 a year. Let's say I'm a 40% tax payer (but this really doesn't matter just give different figure). So tax on the £800 would be £320 a year.

If I decide to buy the car personally then I need to take these funds out of the business.  The most cost effective way to do this is as dividends.  Our higher rate tax payer pays dividend tax at 33.75%. So to have £40k to spend on the car I first need to take £60k out of the business and pay £20k of income tax on this.  If we assume it's a small company paying tax at 19%. then to pay dividends of £60k the company needs to make profits of £75 and pay £15k tax.    End result I personally own the car but the total tax burden is £35k of tax so the car has efectively cost $75k of pre-tax income.  Whereas if the company buys the car then it costs the business £40k and I suffer a £320 income tax bill each year.

If i've got this wrong then I'm sorry (and I've wasted a huge amount of time writing this out).

(And this is not tax advice in any way shape or form, anybody making similar decisions needs to take advice from someone who knows better than me!)

You've got it spot on. In addition you save corporation tax & vat (if applicable) on any ongoing expenses such as tyres, servicing & insurance etc.

Obviously you are liable for tax when it's sold, but if you get your timings right you can get 5 years depreciation @ 25% reducing balance & change the car after 4 years & 1 month.

Exiled_Tyke

CKhalvashi said:

Exiled_Tyke said:

CKhalvashi said:

Exiled_Tyke said:

I'm surprised a personal lease can work out better than a business one.  The personal lease is paid for out of after tax income (and if income hasn't been taken out as dividends there would also be the NI costs to consider as well).  The business lease both allows for CT and VAT deductions but (a relatively small) amount of benefit in kind.  For me (not VAT registered currently) I worked out that an EV would be cheaper through my business.

The Ioniq was purchased outright with a decent discount.

The car has cost me around 8p/mile all in, excluding depreciation. The reimbursement rate for business mileage covers around 65% of the miles the car has done. It comes down to a reasonably cheap car vs the 9p electricity rate on the same mileage.

If the car is worth more than about £12k (a quick search shows it probably is), I'm so far better off with personal ownership. The car should become 'cost neutral' at about 140k miles.

Sorry to be difficult but I genuinely don't understand this.  If I buy an EV through the company then I get to write the whole thing off against tax as a first year allowance.   The benefit in kind rate is 2%. So a £40k car would come out £800 a year. Let's say I'm a 40% tax payer (but this really doesn't matter just give different figure). So tax on the £800 would be £320 a year.

If I decide to buy the car personally then I need to take these funds out of the business.  The most cost effective way to do this is as dividends.  Our higher rate tax payer pays dividend tax at 33.75%. So to have £40k to spend on the car I first need to take £60k out of the business and pay £20k of income tax on this.  If we assume it's a small company paying tax at 19%. then to pay dividends of £60k the company needs to make profits of £75 and pay £15k tax.    End result I personally own the car but the total tax burden is £35k of tax so the car has efectively cost $75k of pre-tax income.  Whereas if the company buys the car then it costs the business £40k and I suffer a £320 income tax bill each year.

If i've got this wrong then I'm sorry (and I've wasted a huge amount of time writing this out).

(And this is not tax advice in any way shape or form, anybody making similar decisions needs to take advice from someone who knows better than me!)

You cannot claim mileage allowances (at 45p/25p) on a company car. These rates are tax free for business travel and a deductible expense for the company.

A £27k-ish, owned outright, car costing 8p/mile to run (including insurance, servicing, consumables and electricity) is better run through personally for someone driving about 2000 business miles a month (I was paid just over £8k last year tax free in mileage allowances that is an allowable expense for the company) with a cost of about £2.5k to run including private mileage but excluding depreciation. This years reimbursement will be a bit higher, but the costs also a bit higher.

At company car reimbursement rates, I'd be down overall, even more so after paying tax on the BIK, however small that would be.

To be driving 24k business miles a year is pretty unusual set of circumstances and won't apply to many but nevertheless I'll attempt to work through the figures. 

Your £27k BEV if bought through a company will cost a higher rate tax payer £216 in additional tax as a benefit in kind.

For higher rate tax payers I calculate that the total tax buden of this would be £23k if bought personally.   

The mileage allowance (45p and then 25p after 10k miles) is not an £8k benefit to the individual but rather represents a tax saving (taking money out of the business tax free as opposed to for example paying dividends.  I make this to be tax saving of £3,700 a year.  After the running costs of £1,900 (24k at 8p) then the benfit to the driver is £1,800 so not much compensation against the £23k. 

 Again I'll happily be corrected if I'm wrong but I calculate that this still doesn't work out favourably for personal ownership. 

Exiled_Tyke

1961Nick said:

Exiled_Tyke said:

CKhalvashi said:

Exiled_Tyke said:

I'm surprised a personal lease can work out better than a business one.  The personal lease is paid for out of after tax income (and if income hasn't been taken out as dividends there would also be the NI costs to consider as well).  The business lease both allows for CT and VAT deductions but (a relatively small) amount of benefit in kind.  For me (not VAT registered currently) I worked out that an EV would be cheaper through my business.

The Ioniq was purchased outright with a decent discount.

The car has cost me around 8p/mile all in, excluding depreciation. The reimbursement rate for business mileage covers around 65% of the miles the car has done. It comes down to a reasonably cheap car vs the 9p electricity rate on the same mileage.

If the car is worth more than about £12k (a quick search shows it probably is), I'm so far better off with personal ownership. The car should become 'cost neutral' at about 140k miles.

Sorry to be difficult but I genuinely don't understand this.  If I buy an EV through the company then I get to write the whole thing off against tax as a first year allowance.   The benefit in kind rate is 2%. So a £40k car would come out £800 a year. Let's say I'm a 40% tax payer (but this really doesn't matter just give different figure). So tax on the £800 would be £320 a year.

If I decide to buy the car personally then I need to take these funds out of the business.  The most cost effective way to do this is as dividends.  Our higher rate tax payer pays dividend tax at 33.75%. So to have £40k to spend on the car I first need to take £60k out of the business and pay £20k of income tax on this.  If we assume it's a small company paying tax at 19%. then to pay dividends of £60k the company needs to make profits of £75 and pay £15k tax.    End result I personally own the car but the total tax burden is £35k of tax so the car has efectively cost $75k of pre-tax income.  Whereas if the company buys the car then it costs the business £40k and I suffer a £320 income tax bill each year.

If i've got this wrong then I'm sorry (and I've wasted a huge amount of time writing this out).

(And this is not tax advice in any way shape or form, anybody making similar decisions needs to take advice from someone who knows better than me!)

You've got it spot on. In addition you save corporation tax & vat (if applicable) on any ongoing expenses such as tyres, servicing & insurance etc.

Obviously you are liable for tax when it's sold, but if you get your timings right you can get 5 years depreciation @ 25% reducing balance & change the car after 4 years & 1 month.

Good points on the additional expenses.