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Deducting the entire £82,000 cost of the car from his corporation profits left a loss of £22,000.
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The rate that can be claimed depends on the car’s CO2 emissions (the lower the emissions, the greater the tax relief).Īs the Tesla is a zero-emission car, Chris was able to claim what’s known as “first year allowances”, meaning that he could deduct the full cost from his corporation profits before tax.Īs he bought the car via hire purchase, even the interest charged received corporation tax relief. HMRC wrote him a cheque for £4,180 to cover the backdated payments, giving him a total saving of £15,580.įind out more: Ten easy ways to cut your tax bill Are electric cars tax deductible?īusiness owners who buy and use a car for work purposes can take advantage of capital allowances. “My Tesla had saved me so much that HMRC had backdated my previous year’s accounts,” he says. In December 2019 his accountant informed him that his £11,400 corporation tax bill was now zero. “When I think of the smell of the fumes in the driveway when I had my Jaguar XF for six years, I know it really makes a difference.”Ĭhris bought the Tesla Model S in February 2018 and pays £788 a month for it, including VAT. “I was thinking about the health of my wife and kids,” he says. Times Money Mentor reader Chris Haycock tells us how he saved thousands of pounds using a tax perk on electric cars.Ĭhris was shocked and thrilled in equal measure to learn that the £82,000 Tesla electric car he had bought had actually saved him money – over £15,500! Chris was primarily concerned with ridding the driveway of the smell of petrol fumes The switch to electricĬhris Haycock, a 49-year-old entrepreneur, was vaguely aware there was some tax relief for business owners buying zero-emission cars, however his main reason for the purchase was environmental.