Electric car through Ltd?

[chopper]

Hi Alan thanks for your input here!

So if I bought a new Tesla S 75D , list price £70,000, how would/should I pay & account for this and what would it cost me personally?

£70,000 is £58333 + VAT. P11D value is £70,000.

You cannot reclaim the VAT, but you can reclaim Corp Tax on the full £70k, so there's a one off £14,000 CT saving there.

7% BIK on £70,000 is £4900. Which means the tax charge to a typical Salary + Dividends contractor is £980 per year. (I believe the BIK rate is going up, though). This removes £4900 from the amount of dividends you can take before you go into the higher rate band, of course.

You also pay 13.8% Class 1A NICs on the BIC from the company, which is £676.20. Per year.


The thing with non-electric cars is that if I buy the car privately, I am not buying BIKs and instead I can pull Approved Mileage Allowance Payments out of the business for business use. This doesn't exist for electric cars, so in fact it may be beneficial to buy it through the business on this basis, given the CT saving (although think of the increase in CT when you sell the car).

Tax rules can change, so what may look like a good idea now, may not work further down the line

[Lewis]

Hi Alan thanks for your input here!

So if I bought a new Tesla S 75D , list price £70,000, how would/should I pay & account for this and what would it cost me personally?

Your company would pay £70K to Tesla, make sure the car is bought in your company name and not yours personally. You will be the registered keeper. Company would then have a £70K expense on its books (which reduces company’s corporation tax bill by £14K).

Each year you will need to pay BIK, so for this year its 7% of £70K i.e. tax on £4.9K, the money is treated as if you earnt it as salary. The actual amount you pay depends on your tax rate. If you were to reduce your salary by £4.9K then there would be no additional tax on what you pay now. But if you keep the same salary and dividends as now you might end up being pushed into higher rate so the personal tax would be £4.9K * 32.5% (because the salary and BIK comes out first and then the dividends after). So worst case personal tax is £1,592. Next year it’s 9% (then 13% then 16%). Plus your company would pay NI on that amount.

The car will depreciate over time, so the value it has as a company asset will reduce BUT you always use the £70K figure even when the car is 10 years old to calculate BIK, so you can’t go on forever and make a saving - at some point you will probably want to buy the car from the company (which means profit to company so corporation tax) or trade in for something new.

You don’t need to pay road tax for electric cars. BUT after April 2017 cars that cost more than £40K will attract an additional tax of around £300 a year for the first 5 years (something like that – you’d need to check). Car insurance can be paid for by company as well as all repair and service costs; so that obviously saves you money that you would normally be paying personally.

[ASB]

Isnt the capital allowancejust smoke and mirrors though? Whenthe vehicle is sold it is added on to profits.

Thus all it affects is when the allowanceis claimed. Not how much.

[Lewis]

Isnt the capital allowancejust smoke and mirrors though? Whenthe vehicle is sold it is added on to profits.

Thus all it affects is when the allowanceis claimed. Not how much.

You'll be selling for less than you bought so there will always be a corporation tax saving.

e.g. buy for £70K (save £14K corp tax) sell for £20K (pay £4K corp tax) => total saved = £10K

[stek]

Have I sold three Tesla's on this thread?

The free charging stops here in DK on 31st Dec, then it's be subsidised. Read a forum to charge the Tesla does cost a fair bit at home, like 50 or 60 quid per month dependent.

Cheaper than petrol but free like the salesman tells you!

Here cars are subject to 180% tax on purchase (yeah!) but not electric ones, though as of 1st Jan they will, 20%. Still, the P100D is still far cheaper here than any decent Merc, BMW and even the top of the range Alfa Guilia, which is 1.5m DKK, about 180,000 quid or so. Ridiculous but then again so is spunking serious cash on any car when public transport is so good. Buses, trains and metro run 24/7 in KBH.

Euphoria worn off a bit now, car is shockingly fast and totally silent, but not really justifiable in a small country like this with excellent public transport.

You also pay a tax of 600kr pa like RFL in UK on Tesla, and you can include servicing in the cost price, no engine, and brakes largely regenerative, so there's not much to do in rhe service bay.

Having a bash in the Model X after Xmas, let's see!

[SuperLooper]

Wait for the Tesla Model 3,

It'll be a long wait. Now looks like it's been pushed back to 2018.

[stek]

It'll be a long wait. Now looks like it's been pushed back to 2018.

Looked at the interior on the prototype, looks spazzy so that's offthe list!

[ASB]

You'll be selling for less than you bought so there will always be a corporation tax saving.

e.g. buy for £70K (save £14K corp tax) sell for £20K (pay £4K corp tax) => total saved = £10K

Agreed. But what i actally meant was that the total relief obtained (over the period of ownership) isnt any greater than it would be for a vehicle wthout 100 pc first year allowance. You get it all up front though, gaining a cash flow advantage.

Everything has the final balancing charge on disposal.

[BackupBoy]

It'll be a long wait. Now looks like it's been pushed back to 2018.

That's for the LHD models. I don't expect to see mine much before 2020.

[DimPrawn]

Even at home?

People in Germany are now being paid to consume electricity | The Independent

They cover the costs by getting the British to pay £350,000,000 per week.