Electric car through Ltd?

[CanPayButWouldRatherNot]

being envious of other peoples' success, makes you sound like the worst kind of permie.
or a Korbynista. Or both.

just bants init

[BolshieBastard]

just giving this a refresh ...

so the elec car BIK is minimal/zero so that is a good incentive then

but my only worry is if uou lease a car on your ltd company .... but then due to ir35 you decided to go permie and close the business

is there hassle with the lease to go to you personally instead ?

Getting out of a car lease deal is very expensive. Virtually all car leasing deals I know of have punitive exit costs. In fact, you'll likely end up having to pay virtually all the remaining lease plus any charges for what they deem 'fair wear and tear.'

If you're thinking of taking on a business car lease, you need to be reasonably confident you're business is going to be able to pay it for the term, pretty much as with any finance deal imho.

[northernladuk]

Getting out of a car lease deal is very expensive. Virtually all car leasing deals I know of have punitive exit costs. In fact, you'll likely end up having to pay virtually all the remaining lease plus any charges for what they deem 'fair wear and tear.'

If you're thinking of taking on a business car lease, you need to be reasonably confident you're business is going to be able to pay it for the term, pretty much as with any finance deal imho.

WB Bolshie!! You well?

All the above. This is part of the reason most accountants advise us to steer clear of cars through the company. It's not just the number on the bottom line, it's the other aspects that can catch you out. One obvious one is mileage. Might be OK for the local(ish) gig you are in but if the next is a distance you are possibly going to fall foul of the excess mileage charges and the like.

[SandyD]

I have a hybrid ultra-low emissions (<50g/km) car owned by the company. The advantages are that it can be written off entirely as an expense immediately upon purchase so the company doesn't pay corporation tax on the cost of the car (you can’t normally reclaim the VAT). I then personally pay a BIK rate of 7% which increases to 16% over the next 3 years (i.e. 7% of the purchase cost of the car incl. VAT, treated as taxable income each year). However the cost of this BIK is less than I was paying in Diesel and I am now mostly on electric (somewhere in the region of 5p/mile). The biggest advantage to me was not the fuel savings but would that it utilised money that would otherwise sit there earning 1% or attract 32.5% dividend tax. So (debatably) I saved 50% on the cost of the car – it all depends on what you might otherwise do with the money (e.g. close company, claim relief and pay only 10% capital gains or take as higher rate). You’ll need to act quickly to avoid the hefty new charges coming in next April. Tesla S awesome, got very close to buying, X not practical enough for a family. Looking forward to the 3.

How do you justify writing it off entirely immediately? I got a hybrid last year, and was seriously going to do it through the Ltd, but decisive factor I think is whether you want to keep the car for long or not, if so, then the BIK will stay with you, but if you want to exchange it within the 3 years, then yest you make savings at the end.

[Magpie252]

Full disclosure: I left the murky world of IT Contracting earlier this year & have set up my own Car Leasing company (albeit a Franchise from a larger company)

You can claim 100% as a first year allowance against all electric vehicles, or vehicles which produce <50g/km CO2
Claim capital allowances: Business cars - GOV.UK

For cars producing <50g/km CO2 registered after 6th April 2020 the BIK will drop to 0%, rising to 1% in 2021, then 2% in 2022
https://assets.publishing.service.go...s_v2.2__1_.pdf

There's not normally an issue switching between Business & Personal lease deals, but you will need to sign a new contract. Business leases are considered 'unregulated' by the FSA whilst Personal deals are 'regulated' & the leasing company will require the appropriate paperwork to be filed.

[highlandspring]

BIK

In the UK the BIK rules are dramatically changing from next tax year 20/21

See the following guide

Company Electric Car Tax | Pod Point

This represents a huge saving on personal tax, so it makes perfect sense to buy a Tesla 3 or other expensive electric car via a Ltd company.

I am planning on doing just that.

[Lance]

In the UK the BIK rules are dramatically changing from next tax year 20/21

See the following guide

Company Electric Car Tax | Pod Point

This represents a huge saving on personal tax, so it makes perfect sense to buy a Tesla 3 or other expensive electric car via a Ltd company.

I am planning on doing just that.

yeah. They're going up.

[kryten22uk]

You can claim 100% as a first year allowance against all electric vehicles

How do you justify writing it off entirely immediately? .

Because people are only giving half the story. If you go the 100%FYA route, then you write off the full value of the car at the start. BUT... then later down the line when you come to sell the car, you record a profit equal to how much you sell it for. Ergo, you only get tax write off for the value of the depreciation.

The other bog standard route is to have no upfront write-off, and instead write off the depreciation each year, similar to other capital assets.

Both get you to the same position at the end, save for discounting/interest etc.

[CanPayButWouldRatherNot]

In the UK the BIK rules are dramatically changing from next tax year 20/21

See the following guide

Company Electric Car Tax | Pod Point

This represents a huge saving on personal tax, so it makes perfect sense to buy a Tesla 3 or other expensive electric car via a Ltd company.

I am planning on doing just that.

that pod-point doesnt include the luxury car tax tho eh ?

After the first year, owners of cars that cost over £40,000 will also have to pay an additional annual supplement of £320 for five years.

Read more: Car Tax Explained - Which? - Which?


shame the tesla m3 is bang on that value

[94bb]

Great advice, plus I think leasing you can claim 50% of the VAT back even if the vehicle is used for non-business mileage, whereas that's not the case if you bought it outright.

Anyhow, and apologies for hijacking this thread but I'm also looking at the iPace but in 2019/20 tax year it attracts something like £ 13k of BIK, which means that would be £ 13k less dividends I'd be able to take However, next year the BIK on electric cars falls down to 2% so I'm definitely having an iPace (or similar) at that point. It would have to have those big space-age looking wheels though :-D

Got mine with the 22inch wheels, in caesium blue