Apologies in advance someone must have requested this previously.........
At what point does BIK % of the list price of a new car make it cheaper to use HP through the business rather than PCP privately.
e.g. Assume the list price of a car is £20,000. If the BIK is 30% then if purchased through the business then, assuming higher rate tax this would be 40% of 30% of £20,000. or £2400.
Therefore if I were paying £300 per month for HP (business) then the cost would be £300*12 + £2400 or £6000
If however if I owned the car privately (assuming the same monthly cost for PCP) it would be £300*12 (as above) + £3600*.4 (40% personal tax) or £3600+£1440 or £5040
I appreciate I have simplified the costs (PCP vs HP) and tax (personal tax on P11D) but is the following statement correct?
If the BIK < 16% (almost half of the example above) then all things considered a company car is cheaper than private ownership.
At what point does BIK % of the list price of a new car make it cheaper to use HP through the business rather than PCP privately.
e.g. Assume the list price of a car is £20,000. If the BIK is 30% then if purchased through the business then, assuming higher rate tax this would be 40% of 30% of £20,000. or £2400.
Therefore if I were paying £300 per month for HP (business) then the cost would be £300*12 + £2400 or £6000
If however if I owned the car privately (assuming the same monthly cost for PCP) it would be £300*12 (as above) + £3600*.4 (40% personal tax) or £3600+£1440 or £5040
I appreciate I have simplified the costs (PCP vs HP) and tax (personal tax on P11D) but is the following statement correct?
If the BIK < 16% (almost half of the example above) then all things considered a company car is cheaper than private ownership.
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