Electric car through Ltd?

[northernladuk]

How does any business keep evidence that a car is used 100% for business purposes?

Usually, keep a log book detailing every journey.

It's is parked on site when not in use like a pool car. But for us we can't. Just it sitting at your house makes it available for private use so no chance its 100% business.

[meridian]

It's is parked on site when not in use like a pool car. But for us we can't. Just it sitting at your house makes it available for private use so no chance its 100% business.

“Available for private use” would be an issue.

Possibly needs specific business insurance that excludes private use, plus perhaps a letter from the director explicitly prohibiting personal use.

[northernladuk]

“Available for private use” would be an issue.

Possibly needs specific business insurance that excludes private use, plus perhaps a letter from the director explicitly prohibiting personal use.

Nope. Even if you did that HMRC would still class it as available for private use, just the fact it's in your drive or at your house. They don't care about insurance or letters.

[meridian]

Nope. Even if you did that HMRC would still class it as available for private use, just the fact it's in your drive or at your house. They don't care about insurance or letters.

On further investigation, that appears to be accurate and backed up by statute and case law:

An Expensive Mistake! Incorrectly Treating Company Cars As Pool Cars

[Chart Accountancy]

Hi all

Have asked my accountant and am awaiting a response on this but am looking for real life examples if there are any here.

Am thinking of a small electric car to run my company errands. Something like the Nissan Leaf on which there are some good (dealer) deals at the moment. As it's zero emissions I'm wondering about the possibility of running this through the business.

Any thoughts on this? (proper forum so keep it relevant please )

You may want to calculate the BIK on the car and compare the tax due against the corporation tax saving, or ideally your accountant would be able to do this for you. You can calculate the BIK value using the below link from HMRC:

http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

[Lance]

Just a casual look at those numbers makes me think a massive incentive to get as many people in electric cars as possible and then a nice soft target for clawing money back of the following years.

methinks that if they can't claw extra money back easily from the upcoming electric car boom (which will happen) by the BIK charge or road tax, they will find another way.

My money is on a charge for consumption rate.
EG. You pay xxp per kWh (kWh being the measure for energy consumed). They will look to charge you a kWh/h charge (that's making the energy charge dependant on time, thus becoming a measurement of power within a set time frame).
The upshot is that you pay more for fast charging, and a lot less for trickle charging. Given that the biggest problem of lots of electric cars is the drain on the grid, they need to incentivise charging at off-peak times, as well as slow charging.

<Geeky electrical engineer mode> using differentiation to convert power usage into energy, to then convert it back to power with integration is an awful lot of maths to do something so simple </Geeky electrical engineer mode>

[gypsymoth]

Hi all. long time no post

I'd like to get an electric company car that I can also use personally, and I've got a BMW i3S in my sights (full electric version)

I ran this past my accountant, had a chat about costs and benefits and then shared some figures with him to verify (which he did). See attached

However, I've gotten a bit confused about the real benefit of buying it thru the company versus paying out of my own pocket. A few things to consider:

-- I have a personal car to sell (which should get me about £27k), but I'd like to use the proceeds of that to pay off personal debts.
-- I have cash in the company thats not doing anything and I'm not likely to liquidate for another 2-3 years

Based on his advice, if I had corp tax bill of 18k this year and 17k next year, the cost of the 35k car wipes that completely as it's 100% benefit. So my decision is about saving 35k of tax, which seems too good to be true / a no brainer?

Naturally there are other BIK costs to consider, but 35k saved versus CT charge when the car is sold in Year 3 + BIK charge to company + BIK charge personally is dwarfed by the 30k tax saving. Again, seems too beneficial

Another aspect I'm struggling with is factoring in depreciation, although the CT charge at sale somewhat factors that in, correct?

Then over the weekend someone suggested leasing to me...

My accountant says that the monthly lease charges can be treated like any normal expense, so based on a £350 a month lease over 3 years, thats a £12600 offset against CT. On the face of it, thats much less beneficial than buying the car outright - is that correct?

Apols for the number of questions but really keen to get my head around it!

Thanks


Imgur: The magic of the Internet

[Maslins]

Based on his advice, if I had corp tax bill of 18k this year and 17k next year, the cost of the 35k car wipes that completely as it's 100% benefit. So my decision is about saving 35k of tax, which seems too good to be true / a no brainer?

Buying a £35k asset will not reduce your CT bill by £35k. It may reduce your taxable profit in that year by £35k (given a 100% write off), so with current 19% CT rate that would reduce your CT liability by £6.65k. Same with your comments re lease costs.

[washed up contractor]

Hi all. long time no post

I'd like to get an electric company car that I can also use personally, and I've got a BMW i3S in my sights (full electric version)

I ran this past my accountant, had a chat about costs and benefits and then shared some figures with him to verify (which he did). See attached

However, I've gotten a bit confused about the real benefit of buying it thru the company versus paying out of my own pocket. A few things to consider:

-- I have a personal car to sell (which should get me about £27k), but I'd like to use the proceeds of that to pay off personal debts.
-- I have cash in the company thats not doing anything and I'm not likely to liquidate for another 2-3 years

Based on his advice, if I had corp tax bill of 18k this year and 17k next year, the cost of the 35k car wipes that completely as it's 100% benefit. So my decision is about saving 35k of tax, which seems too good to be true / a no brainer?

Naturally there are other BIK costs to consider, but 35k saved versus CT charge when the car is sold in Year 3 + BIK charge to company + BIK charge personally is dwarfed by the 30k tax saving. Again, seems too beneficial

Another aspect I'm struggling with is factoring in depreciation, although the CT charge at sale somewhat factors that in, correct?

Then over the weekend someone suggested leasing to me...

My accountant says that the monthly lease charges can be treated like any normal expense, so based on a £350 a month lease over 3 years, thats a £12600 offset against CT. On the face of it, thats much less beneficial than buying the car outright - is that correct?

Apols for the number of questions but really keen to get my head around it!

Thanks


Imgur: The magic of the Internet

So you have discussed with your accountant got his advice and now you're asking a bunch of nobodies on an internet forum to explain it to you?

To be honest, I wouldnt touch an i3 and I love BMW.

Electric car wise, Id currently go with the E Niro. It has better range and charging ability as it can us a CCS charge connector capable of upto 100kw ie faster charging. Alternative is the Kona in electric form. Yes, Tesla's Model 3 will be here soon and no doubt people will be saying it will be £35k. It wont, it'll be nearer £45k and the build quality isnt what it's cracked up to be.

[gypsymoth]

Buying a £35k asset will not reduce your CT bill by £35k. It may reduce your taxable profit in that year by £35k (given a 100% write off), so with current 19% CT rate that would reduce your CT liability by £6.65k. Same with your comments re lease costs.

FFS - that's it! Thanks - I knew I was missing something. What's worrying is that the accountant didnt spot that in the spreadsheet (not sure if it attached properly on my first post).

So the benefits seem much less clear cut now. Perhaps leasing is a better option. Hmmm