New car on PCP or lease - tax question

[northernladuk]

Company car is fine if you definitely want a shiny new car regardless...but don't be tricked into thinking it's the most financially efficient option just because your company gets some tax relief.

I think this comes close to the best answer. If the OP wants a new car but can't afford it personal they get it via the company. If they want be most efficient method then buy it personally.

This comment at the end of their post is exactly what I mean...

Again... yes if you have the cash price for a car sitting in your personal account, this would be the best way, but if you don't, then buying a company car may not be a bad option compared to taking the full car price as divs.

OP just needs to work out what the real aim of this exercise and then pick on of the two options above. I'm not sure picking at all the numbers when in reality they don't have the cash reserves is really achieving anything, particularly when numbers threads often go so badly wrong on here.

To be fair as well looking at the OP's last post they've made the decision already and it's pointless trying to convince them otherwise.

[WTFH]

, but with a new car, there is a 2 year interest free PCP ...

...
- Have 2 year interest free PCP (by buying a new instead of used)
...

Look forward to your replies, I don't mind anyone pointing out my ignorance and issues with the above logic, if there is anything I missed please go a head and point it out.

PCP = Personal Contract Purchase

If it is being bought by a company, then you won't get a PCP on it, you're looking at Business Contract Hire (or similar)

[SandyD]

I don't think people are saying instead of getting a company leased car you should buy a brand new car personally. They're saying you should buy a 5-10 year old car personally. Plenty like that which will still be running fine for years, and only cost a few £k to buy, plus you still get to claim 45p/mile for business miles even though the depreciation is now trivial.

Company car is fine if you definitely want a shiny new car regardless...but don't be tricked into thinking it's the most financially efficient option just because your company gets some tax relief.

I wrote a blog post with my views on company cars here. It's a couple of years old, but the bulk of the logic still holds true.

Agree.... I did want a few years old car which is hybrid, and low mileage, but as I said hybrid cars at that age, and reasonable mileage wont depreciate considerably in the first 5 years, not like other cars e.g. Merc or BMW, where the depreciation is extremely high the moment you take it out of the show room.

My old car is a petrol guzler, costs me a a fortune in petrol, high road tax (£450 a year) every service means something needs to be replaced, that's at least another £500 to £1000 a year... so costing me almost double what its worth every year.

[northernladuk]

Agree.... I did want a few years old car which is hybrid, and low mileage, but as I said hybrid cars at that age, and reasonable mileage wont depreciate considerably in the first 5 years, not like other cars e.g. Merc or BMW, where the depreciation is extremely high the moment you take it out of the show room..

Are you sure about that? I find that very hard to believe. Aren't they a bit new to be making 5 year predictions? I've always fancied an electric car as it would suit my other half's travelling but I'm concerned the batteries need replacing in a 3 to 5 year window and a couple of K a pop. A hybrid might not depreciate for 5 years but if the batteries turn out to need replacing the price will drop off a cliff edge. Also as hybrids become more mainstream that future planning could change considerably.

I'm not 100% convinced.

[northernladuk]

Anyone else thinking the outcome of this thread will be 'It's more tax efficient to do it personally' as always?

[Lance]

Are you sure about that? I find that very hard to believe. Aren't they a bit new to be making 5 year predictions? I've always fancied an electric car as it would suit my other half's travelling but I'm concerned the batteries need replacing in a 3 to 5 year window and a couple of K a pop. A hybrid might not depreciate for 5 years but if the batteries turn out to need replacing the price will drop off a cliff edge. Also as hybrids become more mainstream that future planning could change considerably.

I'm not 100% convinced.

Nor am I so rather than just make stuff up I trawled Autotrader for 5 minutes.

Toyota Prius - new = c. £32,000
Toyota Prius - 3 years old = c. £18,000
Toyota Prius - 8 years old = c. £10,000

So make sure you buy one more than 5 years old to get the best depreciation.

[Maslins]

I've always fancied an electric car as it would suit my other half's travelling but I'm concerned the batteries need replacing in a 3 to 5 year window and a couple of K a pop.

This basically applies to me too. Some of the car manufacturers are getting round this by you buying the car, but leasing the battery. Sort of solves the problem, but then puts you back in a situation where you're committing to a pay monthly thing.

Also as the tech is in its fairly early days, get the feeling that in 3-5 years new electric cars will be significantly better than ones available now. Whereas for petrol/diesel, the technology is fairly well established so not such dramatic improvements.

[SandyD]

Are you sure about that? I find that very hard to believe. Aren't they a bit new to be making 5 year predictions? I've always fancied an electric car as it would suit my other half's travelling but I'm concerned the batteries need replacing in a 3 to 5 year window and a couple of K a pop. A hybrid might not depreciate for 5 years but if the batteries turn out to need replacing the price will drop off a cliff edge. Also as hybrids become more mainstream that future planning could change considerably.

I'm not 100% convinced.

Yes the price drops after the 5 year warranty, or first 50K miles whichever comes first, but I didn't want a car which is almost 5 years, so opted to research hybrids around 1 to 1.5 year old, and I found the price for the model I wanted doesn't depreciate considerably, easy to do your research on this, and no wonder uber/taxi drivers all want to have a hybrid, and run a bazillion mile on it.

I would have loved to have an electric, but they are all too small for my needs, (the Tesla is a bit too expensive for me lol) I thought I saw a large Nissan Leaf, perhaps that's OK, mind you I didn't see it on their website, an electric would be the best of course from tax pov.
Renault last year announced the new Kadgar which is a plug in hybrid, I was hoping I can get that, was waiting for it this year, but unfortunately they haven't released it yet.

[SandyD]

Nor am I so rather than just make stuff up I trawled Autotrader for 5 minutes.

Toyota Prius - new = c. £32,000
Toyota Prius - 3 years old = c. £18,000
Toyota Prius - 8 years old = c. £10,000

So make sure you buy one more than 5 years old to get the best depreciation.

I am not going for a Prius, new Prius starts from 24K I think, depends on the specifications, but yes, the prices above can be right, HOWEVER, you didn't list the mileage as well, the warranty is either 5 year or first 50K miles only.. I have seen cars which are 3 year old and have an extremely high mileage, most Prius that has under 20K mileage would have been priced around 20K... that's a depreciation of 4K only, plus you do not get 2 year interest free PCP, and no old car scrap scheme worth 2.5K