Tax and the Electric car revolution

electric tax accountants kendal cumbria grange

From 1 September 2018 a new advisory fuel rate of 4 pence per mile applies to electric vehicles. This means that if your employees have electric company cars and they meet the cost of electricity for business journeys, you will be able to reimburse them at a rate of 4 pence per mile without triggering a tax liability or having to report the payment to HMRC. If, however, the payment exceeds 4 pence per mile, any excess over that amount is taxable and you must report the profit element to HMRC on the employee’s P11D or deal with it through the payroll.

Speak to the electric car accounting experts in cumbria to find out what the new rate means for your business.


From 2020/21 new company car bands are being introduced which will significantly lower the benefit in kind tax charge for electric company cars. The benefit in kind tax charge for electric cars and those with emissions of between 0 and 50g/km is currently 13% of its list price; this is to increase to 16% for 2019/20. However, from 2020/21, the charge for zero emission cars will drop to 2%, whereas that for cars in the 1 to 50g/km band will depend on the electric range of the car, as set out in the table below:

CO2 emissionsElectric rangeAppropriate percentage
1–50g/km 130 miles or more2%
1–50g/km 70 to 129 miles5%
1–50g/km 40 to 69 miles8%
1–50g/km 30 to 39 miles12%
1–50g/km Less than 30 miles14%

Looking ahead, the potential tax savings to the employee from choosing an electric car are significant. The reduction in the charge will also reduce the amount of Class 1A National Insurance that you, as an employer, will pay.

Speak to Electric car tax advisors Grange, Kendal and Ulverston to see how you can plan ahead to make the most of these changes.


No fuel benefit charge arises if you provide electric charging points for your employees to use to charge an electric company car. HMRC do not regard the provision of electricity to power a company car as a ‘fuel’ and consequently there is no fuel benefit charge if you meet the cost of electricity for employees’ private journeys in an electric company car.

With backdated effect from 6 April 2018, a new exemption is being introduced which prevents an income tax charge from arising if an employee uses an employer provided charging point to charge their own electric or hybrid car, or one in which they are a passenger. However, the exemption only applies to electric charging points provided at or near the workplace, and is dependent on charging facilities being available to all employees who wish to make use of them. However, if you have more than one site, you do not need to provide a charging point at each of them for the exemption to apply.




The start date for Making Tax Digital (MTD) for VAT is fast approaching. If you are a VAT-registered business with turnover in excess of the VAT registration threshold of £85,000, you will need to comply with the requirements of MTD for VAT from the start of your first VAT accounting period beginning on or after 1 April 2019. If you are VAT registered but your VATable turnover is below £85,000, you can choose whether to join in, but if you do there is no going back and once in MTD for VAT you will need to stay within MTD for VAT as long as you remain VAT registered.

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Making Tax Digital by April 2018

Making Tax Digital (MTD) is an initiative by the Government to turn the UK into one of the most digitally advanced tax administrations. The proposals are far reaching and will ultimately affect all taxpayers.

Under the MTD reforms, businesses will be required to keep digital records and report digitally to HMRC each quarter. MTD is being introduced gradually and will apply from April 2018 to unincorporated businesses and landlords with turnover in excess of the VAT registration threshold – set at £85,000 from 1 April 2017. This is less than a year away and does not allow very long to get systems in place to meet the requirements which MTD will impose.

Unincorporated businesses and landlords should discuss what MTD means for them with their tax advisers sooner rather than later to ensure that they are ready by April 2018.

Capital Gains Tax 2017/2018

The annual exempt amount is increased to £11,300 for 2017/18. However, the rates are unchanged, remaining at 10% to the extent that total income and gains do not exceed the basic rate band. For Scottish taxpayers, this is £33,500 as capital gains tax is not devolved. To the extent that total income and gains exceed the basic rate band, capital gains tax is charged at the rate of 20% for 2017/18. Higher rates of 18% and 28% respectively apply to gains on residential property.

Capital gains tax on houses

There is no tax to pay on the proceeds from your ‘principal private residence’

However from April 2015 people with more than two properties can no longer choose which is to be treated as their main home for capital gains tax purposes. Instead a test must be completed counting days spent in each property to determine which is in fact going to be treated as the main home.

So for an individual who rents during the week or lives in employer provided accommodation to be near to work but then goes home at the weekend may have to prove that the main home is in fact the ‘weekend cottage’.

There is to be a consultation on how this test is to be framed.