Company cars – lots of changes!
Take extra care when reporting company cars on Form P11D over coming weeks.
For 2020/21, there were significant changes to the percentages that need to be applied to the list price of a car when calculating a benefit, namely:
• Electric cars now have a zero benefit
• The percentage for cars up to 50g/km of CO2 emissions now takes account of how far the car can travel in pure electric mode as well as the level of emissions; and
• There are separate percentage tables for cars first registered up to 5 April 2020 and those first registered after that date
For cars purchased from April 2021, there are important changes to the Capital Allowances that businesses claim as a replacement for the depreciation is the accounts:
• New electric cars – 100% of the cost is relieved in the year of purchase (NB this was previously available on a broader range of cars)
• Cars above 50g/km (‘high emission’ cars) only attract very slow tax relief – previously this threshold was 110g/km, so many more cars are now affected
Where cars are leased rather than bought, the leasing cost in the accounts is generally allowable for tax, subject to a 15% disallowance for high emission cars. For leases entered into from April 2021, many more cars will therefore suffer this disallowance.