Tesla and Tax Breaks
"As the Tesla is a zero-emission car, Chris was able to claim “first year allowances”, which meant he could deduct the full cost from his corporation profits before tax. Plus, as he bought the car via hire purchase, even the interest charged received corporation tax relief."
Sounds too good to be true, for most people at least, but Chris did so well out of this tax break that he managed to book a family holiday to Disney World in Florida with the money he saved.
Now I don't begrudge anyone benefiting from their own hard work and endeavour, but if you ask me this kind of tax break is obscene and indefensible.
https://www.thetimes.co.uk/money-mentor/money/tax/small-business-tax/tax-saving-electric-car
Tax accelerator: “I saved £15,580 on my Tesla Model S”
https://www.thetimes.co.uk/money-mentor/money/tax/small-business-tax/tax-saving-electric-car
Tax accelerator: “I saved £15,580 on my Tesla Model S”
By Katie Binns - The Times
Chris Haycock was shocked and thrilled in equal measure to learn in December 2019 that the £82,000 Tesla electric car he had bought in February 2018 had saved him £15,580 in tax.
“My accountant told me my £11,400 corporation tax bill was now zero and that my Tesla had saved me so much that HMRC had backdated my previous year’s accounts and written me a cheque for £4,180 – it was a total saving of £15,580.”
Chris Haycock was shocked and thrilled in equal measure to learn in December 2019 that the £82,000 Tesla electric car he had bought in February 2018 had saved him £15,580 in tax.
“My accountant told me my £11,400 corporation tax bill was now zero and that my Tesla had saved me so much that HMRC had backdated my previous year’s accounts and written me a cheque for £4,180 – it was a total saving of £15,580.”
Chris was primarily concerned with ridding the driveway of the smell of petrol fumes
The large tax break meant that Chris, a 49-year-old entrepreneur who runs CliqTo Media, a network of digital brands, was able to boost his family’s Christmas. “It had actually been an average year for the business – but on hearing this, we were able to book a trip to Walt Disney World in Florida.”
Although he was vaguely aware there was some tax relief for business owners buying zero-emission cars, Chris, from Stafford, had bought the Tesla Model S primarily for environmental reasons. “I was thinking about the health of my wife, Lucy, and twin girls, Emily and Lauren, aged 8. 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.”
Business owners who buy and use a car for work purposes can take advantage of capital allowances. The rate that can be claimed depends on the car’s CO2 emissions – the lower the emissions, the greater the tax relief available. As the Tesla is a zero-emission car, Chris was able to claim “first year allowances”, which meant he could deduct the full cost from his corporation profits before tax. Plus, as he bought the car via hire purchase, even the interest charged received corporation tax relief.
Deducting the entire £82,000 cost of the car from his corporation profits left a loss of £22,000. This could then be carried back to the previous year where relief at 19% could be claimed to obtain a corporation tax refund – the cheque for £4,180.
Chris appreciates the luxury that his Tesla has brought him after serving in the Gulf War in 1991 and experiencing homelessness shortly afterwards before going on to successfully build up his business.
“Buying the Tesla was a little treat for all the hard work I’d put into my business over the last decade and how far I had come,” he says. And how does the electric car feel to drive? “I love fast cars and the acceleration is great,” he grins.
The large tax break meant that Chris, a 49-year-old entrepreneur who runs CliqTo Media, a network of digital brands, was able to boost his family’s Christmas. “It had actually been an average year for the business – but on hearing this, we were able to book a trip to Walt Disney World in Florida.”
Although he was vaguely aware there was some tax relief for business owners buying zero-emission cars, Chris, from Stafford, had bought the Tesla Model S primarily for environmental reasons. “I was thinking about the health of my wife, Lucy, and twin girls, Emily and Lauren, aged 8. 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.”
Business owners who buy and use a car for work purposes can take advantage of capital allowances. The rate that can be claimed depends on the car’s CO2 emissions – the lower the emissions, the greater the tax relief available. As the Tesla is a zero-emission car, Chris was able to claim “first year allowances”, which meant he could deduct the full cost from his corporation profits before tax. Plus, as he bought the car via hire purchase, even the interest charged received corporation tax relief.
Deducting the entire £82,000 cost of the car from his corporation profits left a loss of £22,000. This could then be carried back to the previous year where relief at 19% could be claimed to obtain a corporation tax refund – the cheque for £4,180.
Chris appreciates the luxury that his Tesla has brought him after serving in the Gulf War in 1991 and experiencing homelessness shortly afterwards before going on to successfully build up his business.
“Buying the Tesla was a little treat for all the hard work I’d put into my business over the last decade and how far I had come,” he says. And how does the electric car feel to drive? “I love fast cars and the acceleration is great,” he grins.
What I did
- I bought my £82,000 Tesla Model S under hire purchase in February 2018. I waited four months for its delivery. My payments are £788 a month including VAT.
- I handed over all the paperwork to my accountant.
- In December 2019, my accountant called to say the purchase of my Tesla had wiped all £11,500 of my corporation tax. I also received a cheque of £4,180 from HM Revenue & Customs.
What worked
- My experience with Tesla, in Birmingham, was brilliant. There is no hard sell. The process felt streamlined and relaxed: once I had ordered my car, I could watch the progress of it being built via online updates. When it was unveiled from under a silver dust sheet four months later in Birmingham, I felt like royalty.
- You get 1,000 free miles a year from Tesla to supercharge your car.
- Thinking strategically for long journeys. The longest trip I have made in the car is from Stafford to Great Yarmouth in Norfolk – around 225 miles. I only had to stop once along the way, for 40 minutes to supercharge my battery.
- Leaving everything to my accountant regarding tax calculations and paperwork.
What didn’t work
- There was only one journey – to Anglesey in north Wales – that I could not make because of supercharging difficulties. The only charger on the way was in Colwyn Bay, also in north Wales, but it was a destination charger, which meant I would have had to stay in the hotel for a night in order to use it.
