Second hand car through the company

[MankyManning]

Quick question on buying a second hand car through my company.

I have bought a Mitsubishi Outlander PHEV and my accountant tells me that with such low emissions it might be worth having the company buy it so I can offset corp tax with the amount I paid for the car (100% of capital can be offset against corporation tax)

I do however have to pay BIK obviously but with the car cost and servicing coming out of the company it would appear very attractive. The bit I don’t fully understand though is do I have to pay the BIK forever, i.e. as long as the car is in the company?

If I was thinking of keeping it more than 2 or 3 years then it starts to not be worth it as the initial tax saving is wiped out from on-going BIK…have I got that right? i.e. it is worth it if you get rid in say 2 or 3 years but then if you sell the car then you have to pay that back into the company anyway...

[FrontEnder]

You're already speaking to your accountant about it, so ask them.


I'v enever had to pay a BIK, but I think you pay it as long as you are receiving that benefit. So probably as long as the company owns the car. If you don't want to pay the BIK more than a couple years, the company would have to sell the car (which I guess if you still want to use it, to you).

[northernladuk]

Why don't you ask your accountant again? This time if he says 'might be' point out you pay him good money and expect better than 'might be'. Do their job and tell you if it is or isn't.

[Patrick@Intouch]

Things to consider in relation to this are:

First Year Allowances are claimable currently for vehicles that are completely electric or have emissions of less than 75 g/km. This would allow the company to potentially offset 100% of the cost of the vehicle against profits in year 1. The benefit of this is then 19% of the cost in corporation tax reduction.

The benefit in kind would be calculated by reference to the list price and the CO2 emissions. This BIK will be declared and any tax due payable for each year that the company owns the car. If the company is also paying for fuel then there will be a taxable benefit arising on that also.

The number of miles driven on company related business each year. If this is significant then the mileage allowance that you would be able to claim may be an important factor here.

If you provide all of these details to your accountant they should be able to provide you with a detailed comparison.