Tax treatment for new EV

A

AJ1

Registered User
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Hi there,

I'm a sole trader due to earn an put 50k this year after expenses. Trying to weigh up the advantages of a new Electric vehicle. I use the car for work one third of the week and personal use two thirds.

If I was to buy a new ev this year, would the cost of the car be deducted from my income under the bik criteria and accelerated capital allowances?
 
I see it's 24000 not the full price of the car. I suppose my question is can 24000 be deducted from my gross income if I bought a new EV even though I would be using it for personal use as well as business?
 
I can't see how you could possibly do this. Maybe talk to your accountant. Could be worth looking at leasing as well.
 
I was a sole trader for the past 5 years. In 2019, I bought a new car. My accountant only allowed an element of the depreciation against my income tax, each year.
 
Slim said:
I was a sole trader for the past 5 years. In 2019, I bought a new car. My accountant only allowed an element of the depreciation against my income tax, each year.
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Thanks.

There seem to be a different treatment of electric vehicles where the capital depreciation can be fully written off in year one. I do my tax return myself but will get advice from an accountant on this.
 
Just make sure you understand the tapering off of the BIK benefit in the coming years.
ie first 35k disregarded in 2024 and 2025 but this reduces to first 20k in 2026 and 10k in 2027.

The government have already extended the scheme twice so there is always the change it could be extended further.
 
Savvy said:
Just make sure you understand the tapering off of the BIK benefit in the coming years.
ie first 35k disregarded in 2024 and 2025 but this reduces to first 20k in 2026 and 10k in 2027.

The government have already extended the scheme twice so there is always the change it could be extended further.
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Does BIK apply to sole traders?
 
BIK is only relevant to cars owned by an employer and used by an employee. A sole trader buying a car and using partly for business and partly for personal use can claim capital allowances in proportion to the amount of business use.
 
Ciru75 said:
BIK is only relevant to cars owned by an employer and used by an employee. A sole trader buying a car and using partly for business and partly for personal use can claim capital allowances in proportion to the amount of business use.
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Thanks. Didn't realise this. Not much benefit to me then as a sole trader as I'd use the car more for personal use.
 
I'm a PAYE employee but also have a sole trader 'side gig' registered with Revenue. For my private EV purchased 2018, I claimed full Accelerated Capital Allowance in year 1 - as with OP I claim for 1/3 business use so this was an €8000 expense allowed against my income from the side gig. I additionally claim 1/3 of the interest cost of the car loan against tax, as well as 1/3 of my utility bills.

I subsequently changed to another EV in 2021 and was able to claim a portion of the ACA again, on the difference between the full €8k, and the residual value of the old car (as a proportion of the original €24k limit cost). I will be doing this again for 2023 but won't get very much out of it as the trade in value was close to the purchase price.
 
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