Business owners and employers who provide their employees with company vehicles before March 2025 can enjoy substantial tax benefits in the next few years for making the switch to pure electric in advance of the 2030 ban. Example Case study:

A potential prospect heard about the tax relief available to business owners and employees with company vehicles, who switch to pure electric before the 2030 ban. He uses a company car and therefore can also benefit from his company making the change.

Dixcart UK can advise clients who are considering a move to electric company cars that they can:

• Benefit from a 100% corporation tax relief on the purchase price in the year of purchase of the vehicle, provided that the car is new and unused.
• Lease the vehicle if they wish and that the lease payment for an electric car is fully deductible against tax for the employer, although VAT recovery is limited to only 50% of the VAT cost – where the vehicle is used privately by the employee.
• Provide clients with the use of the company car with a drastically reduced benefit in kind which would not only save tax but also would save the company employer’s NIC.
• Benefit from a much lower value for the taxable benefit in kind and enjoy savings of income tax for the employee and Class 1A NIC for the employer, as the percentage for an electric car on how polluting they are is a modest 2% (compared to 37% for diesel and petrol cars).
• Allow employees to continue to give up salary for their vehicle via salary sacrifice with an electric car, without being caught by the Optional Remuneration Arrangements (OpRA) rules. Where the employee gives up some salary for an electric car, the employee can still only pay tax on the cash equivalent of the benefit in kind if this is less than the salary given up.

In addition, there are incentives for employers who provide charging points on the work premises so employees can enjoy the convenience of charging while they are at work. Employers who install electric charging points and electric charging equipment can claim 100% of the cost as a first-year allowance and receive immediate upfront tax relief. They can also recover the VAT.

At the moment, the favourable tax treatment is set to run until March 2025, but there is no guarantee how long the benefits will be retained.

Going back to our example case study, the company (having understood all of the advantageous incentives for both employers and employees), have decided to go ahead and make this change now.

They have decided that the company will buy new, electric cars for the directors and key staff members and they have also decided to upgrade their carpark in order to provide workplace charging points. They would like to incentivise their staff members and show that they care about the wellbeing and values of their employees.

EU company looking to expand into the UK and relocate several non-EU employees. Example Case study:

A German company is looking to expand into the UK but does not already have a UK company incorporated. They also want to relocate several non-EU employees, currently based in Germany, to the UK.

Dixcart can initially start by assisting the client with the employment aspect in the UK, but the rest of our legal team, Immigration, and tax and accounts teams can also help by providing the below services:

Employment:

• Advising on the English employment rights for the employees and what that means
• Drafting UK employment contracts for the employees
• Drafting an employee handbook
• Liaising with the client’s German lawyers, regarding the implications in Germany, ahead of and after, the move

Immigration

• Advising the employees relocating on the UK immigration rules and requirements and assisting with the appropriate visas

Tax

• Advising on the requirement for UK payroll and setting this up for the company and running the payroll going forward
• Advising on the tax payable by the company in the UK
• The personal tax implications for the employees, once they have relocated to the UK, and personally helping them with their tax planning

Legal

The rest of our legal team, our commercial company and commercial property advisers, can help with the:

• Incorporation of the UK company
• Produce articles of association, including different share classes and rights
• Advise on a commercial lease and follow out all of the necessary procedures and protocols in acquiring a commercial property

Accounts

Once a UK company has been incorporated, Dixcart UK can:

• Prepare the monthly management accounts for the UK entity
• Register the company for VAT and prepare the quarterly VAT returns
• Manage the annual accounts
• Manage the annual corporation tax compliance

We can Help

Should you need any further advice and assistance, please email: hello@dixcartuk.com.

Mr and Mrs Jones relocated to the UK in 2021 and wish to benefit from the Remittance Basis of Taxation. Example Case study:

At the beginning of January 2021, Mr and Mrs Jones decided they wanted to relocate from Australia to the UK, so that their two minor children could start school early in September 2021.

They had already consulted with an Australian tax adviser to make sure that they carried out all of the relevant local tax planning in preparation for leaving Australia, but they were contacting us to find out what the tax implications would be for them once they had relocated to the UK.

The previous year, their friends had relocated to the UK, and believing that as they were not originally from the UK, they would be taxed on the ‘remittance basis’ and hence not on their non-UK source income, had found themselves liable to a substantial amount of capital gains tax and income tax as they had not planned for the move.

Fortunately for Mr and Mrs Jones, they had heard of this and not wanting to find themselves in the same situation, sought UK tax advice.

They had a large sum of cash savings held in an Australian bank and were planning on renting out their property in Australia, from August 2021.

Dixcart UK are able to advise them that:

• They would become tax resident in the UK from 1 August 2021 under the UK’s split year rules (as they planned on moving to the UK on 1 August 2021) and would be liable to file a tax return by 31 January 2023 and pay any taxes due,
• They should instruct their Australian bank to make sure interest from their cash savings is kept in a new, but separate account going forward, and
• They should instruct their Australian bank, as of August 2021 when they start to rent out their property, to make sure rental income is deposited in a separate newly created bank account (but within the same bank).
• If they ever decide to sell their Australian property, they should not remit this income to the UK (unless they need the funds in the UK but see below) but add the proceeds of the sale to a newly created capital gains account with their bank.

In regard to the final bullet point, we often see individuals sell their properties abroad in order to purchase a property in the UK, which is exactly what the friends of our clients did.

Instead, if Mr and Mrs Jones ever decide to purchase property in the UK, they should try to remit monies from their original cash savings, rather than use the money from the sale of their property, as they would be remitting capital that they have PRIOR to becoming UK tax resident, and that this would be tax free in the UK providing the followed the advice above.

As planned, in August 2021, Mr and Mrs Jones moved to the UK ready for the new school term. If they had not sought UK tax advice in advance of this, and put appropriate tax planning measures in place, they may have had a very different start to living in the UK than they did.

Read our article here to find out what happened to their friends and how the outcome for them could have been so different and could have resulted in a UK tax liability of ZERO instead of what did happen.