The tax impact of greener motoring

As motorists, our growing demand for reduced costs and greater efficiency coupled with increased choice and performance, has resulted in a massive increase of plug in and hybrid car sales.

There has been a huge surge in demand for ultra-low emission vehicles in the UK, with sales of electric and hybrid cars increasing.  BEVS (Pure Battery powered Electric Vehicles) have risen by 158% in the year to July 2019 and by the end of the year at least 25 different electric cars will be on sale.  There have also been driverless car trials and it is thought that if driverless cars do become an everyday reality, benefits would include improved road safety, reduced congestion, less emissions, as well as saving motorists up to 6 working weeks a year in driving time.

Going electric – the tax breaks

The government does of course encourage the use of electric and hybrid cars through the use of tax breaks. Regrettably, the value of grants has declined and plug-in hybrids have not received any financial support since 2018.

One area where the government could make a significant contribution to more environmentally friendly cars is through VAT, particularly when the UK is able to set its own rates post-Brexit. Reducing the rate of VAT on ULEVs from 20% to 5% would help but in the real world it is highly unlikely that the Treasury will agree to such a reduction.  But what concessions are actually allowed and what are some of the common misconceptions?

Common misconceptions

There are some commonly held misconceptions about the VAT breaks for businesses buying electric and hybrid cars. There have been numerous cases of car dealers telling customers that businesses can recover the VAT on the purchase of an electric car.

The reality

The first point is that HMRC has no special VAT breaks for electric cars and hybrids. The VAT can only be recovered on the purchase of the car if there’s no private use at all, and that includes home-to-work journeys. So you can only reclaim the VAT on the purchase of the car if it’s for 100% business use only.  An example of this would be a taxi.  If your business leases the car, then you can recover 50% of the VAT on the hire charges and all the VAT on any additional charges such as maintenance or roadside assistance.

Scale charges

The main tax break is on the motoring scale charge. The rules are exactly the same for electric and hybrid cars as for those powered by fossil fuels, however the savings come from the fact that the scale charge is based on CO2 emissions and as electric cars produce no CO2 they don’t pay the scale charge, although the VAT you can reclaim on electricity used to charge the cars will be minimal. On the plus side hybrids will pay a scale charge, but because of the reduced CO2 emissions the charge will be lower than for conventional cars.

HMRC gives no special VAT breaks to electric or hybrid cars but due to their low emissions there are savings on the scale charge excise duty and other direct taxes.

The cleaner the car, the bigger the savings.

For more information on this subject please contact Jonathan Main

Our annual CSR results for 2019 are in!

We have had another fantastic year at MHA Moore & Smalley. After sending out the survey to over 4200 clients, we have received an overall satisfaction score of 96%, a 1% increase on last years, already great, result.

This score is based on clients’ answers in response to questions that rate us in terms of communication, technical ability, commitment to each individual business, and our CRM.

Thank you to everyone who got involved. Delivering outstanding client service is at the heart of everything we do. Therefore it is wonderful to know that we are delivering on our mission, vision and values, as we continue to improve and strive to be the best we can be.

Take a look at this year’s results below

Blackpool car repair firm opens new £3m premises

A family-run accident repair centre in Blackpool has set the wheels in motion to become Lancashire’s number one car repairer, following a £3m investment in their brand new bodyshop.

Fylde Coast Accident Repair Centre (ARC) has relocated to a new 18,000 square foot workshop on a site covering 2.3 acres at the Blackpool Airport Enterprise Zone, creating five new jobs to date.

With a turnover of £3.5m its workshop currently repairs over 2,400 vehicles per year, working alongside major insurance companies.

The firm was advised on its expansion by MHA Moore and Smalley. The team, led by David Bennett and Judith Dugdale, provided advice on fundraising and tax for the acquisition and development of the site.

Fylde Coast ARC is run by owners David and Linda Hyland, together with their son Dane. Between them they have over 35 years of experience, specialising in the repair of car and light commercial vehicles.

David, managing director, said: “I started the company in 1982 with just one apprentice and by building a loyal customer base, we’ve been growing the business ever since. Once we realised we had outgrown our old premises, we decided to take the brave decision to build a new state-of-the-art facility.

“Since opening our doors it’s really taken off. With an eye on the future, we have invested heavily in the latest vehicle technology including charging points for the new generation of electric vehicle repairs, as well as training on electric vehicles for our technicians. The feedback from our customers has been very encouraging.”

David added: “We’ve already secured a new contract with a major leading insurance company and we’re attracting skilled technicians who are keen to work in our brand new facility. Our ambition is to be one of the best accident repair firms in Lancashire.”

Judith Dugdale, corporate services director at MHA Moore and Smalley, added: “Fylde Coast ARC is a great example of a successful family-run business planning for the future. We’ve worked with David and Linda for over 15 years and it’s great to see their son Dane join the team.

“Building new premises is a big step but we provided expert advice to ensure they maximised tax savings available on the new-build, money they can reinvest in growing the business. I am delighted to assist them with the next stage of their business growth and continue their success story.”

Founded in 1982, Fylde Coast ARC employs 36 staff and is an approved repairer for Audi, Citroen, Hyundai, Mitsubishi, Peugeot, Seat, Skoda, Vauxhall and VW.

Ginni Cooper

Professional: Ginni completed her AAT and ACA training with MHA Moore and Smalley and is proud to have been part of the growth and development of the firm. Responsible for a varied portfolio of medium and large owner-managed businesses she provides accountancy, statutory audit and business support services. Ginni is ardent about client service and works to develop long standing relationships, whilst delivering on both compliance and advisory requirements. 

Ginni is head of the Manufacturing and Engineering team and has been involved in judging local business awards relevant to the sector over recent years

Personal: In her personal time Ginni can be found walking the dogs and enjoying various outdoor activities, she is an active gym member and also plays for the MHA Moore and Smalley netball team.