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Company Car Q

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    Company Car Q

    Hi All,

    Wanted to raise a general query around company cars and get some insight into how you guys have handled this, aswell as a second opinion, so to speak.

    I spoke to my accountant about getting a car via the LTD, as mixed personal/business use. He said that I cannot re-claim any VAT as it's mixed use, however it will be treated as a capital allowance. If this rings true, for hypothetical purposes, what would the tax saving be on say a £20,000 vehicle? He claim's it's 20% i.e. corp tax savings.

    Also, given the fact that you dont need to draw the money out and pay tax its more tax efficient?

    I've read a range of articles, but still find it all a little confusing!

    Thanks,

    SirA
    Last edited by sira; 13 October 2018, 07:02.

    #2
    The general consensus is to not bother with a car through the Ltd.

    If it were beneficial we'd all be doing it and it would be in all the basic guides. The fact it isn't speaks volumes.

    Try the Google search method to look for the multitude of threads on this topic on here.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Originally posted by northernladuk View Post
      The general consensus is to not bother with a car through the Ltd.

      If it were beneficial we'd all be doing it and it would be in all the basic guides. The fact it isn't speaks volumes.

      Try the Google search method to look for the multitude of threads on this topic on here.
      Very hepful, thanks.

      Bump.

      Comment


        #4
        Originally posted by northernladuk View Post
        The general consensus is to not bother with a car through the Ltd.

        If it were beneficial we'd all be doing it and it would be in all the basic guides. The fact it isn't speaks volumes.

        Try the Google search method to look for the multitude of threads on this topic on here.


        This ^^^^^^

        To add to it. The only way it makes sense is if the vehicle is a genuine commercial vehicle as the BIK tax is capped. The biggest issue is that you end up driving a van or a redneck wagon. If either of those float your boat then investigate further.
        See You Next Tuesday

        Comment


          #5
          OK, since you're looking for someone to give you more than "no, it's a bad idea", or "search for it and you'll find it's a bad idea", a few questions:

          1. Is it a new car?
          2. What make/model?
          3. Are you looking to buy it outright, or take a business lease on it?
          4. Do you know the difference between personal finance deals and business finance deals?
          5. Roughly how many business miles will you do in a year?
          6. Roughly how many personal miles will you do in a year?
          7. Do you know the BiK of the car? (If not, look here: Company Car Tax Calculator | Parkers )
          {emotionless greeting}

          Three Word Slogan

          Comment


            #6
            Originally posted by WTFH View Post
            OK, since you're looking for someone to give you more than "no, it's a bad idea", or "search for it and you'll find it's a bad idea", a few questions:

            1. Is it a new car? No
            2. What make/model? circa 2014/2015 bmw 328i/330i
            3. Are you looking to buy it outright, or take a business lease on it? Outright
            4. Do you know the difference between personal finance deals and business finance deals? Yes.
            5. Roughly how many business miles will you do in a year? approx 2,500
            6. Roughly how many personal miles will you do in a year? approx 2,500
            7. Do you know the BiK of the car? (If not, look here: Company Car Tax Calculator | Parkers )
            7. based on the 330i, it says 29% / annual tax at 20% £1979 / cash equivalent £9895

            edit - answers above

            Comment


              #7
              Originally posted by sira View Post
              7. based on the 330i, it says 29% / annual tax at 20% £1979 / cash equivalent £9895

              edit - answers above
              Who would pay for the maintenance of the car? You or the company?
              How much do you think you can claim on fuel for your business mileage?

              Based on your figures, you'll be paying 10% of the purchase price of the car in personal tax each year. Remember, that's your personal tax, not company tax. So after 2 years of ownership, you'd have paid 20% of the value of the car in tax. Your company would be out £20k, and you are out £4k. At 3 years, your company is out £20k and you are out £6k.
              Each year that you have the car it is costing you more money while depreciating.
              Keep it for 5 years, and the car has cost you £10k in tax, which is more than what a 10 year old BMW is worth. And your company paid £20k for it as well.

              Should you decide to change the car, don't forget it belongs to the company. It's not yours, it's a depreciating asset on their books.
              {emotionless greeting}

              Three Word Slogan

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                #8
                Suggest if you’re hell bent on it to ignore the advice of others or DYOR then just do what you want.

                There are scenarios where via the company might be a good idea but for the majority it’s either personally buy a second hand car that’s largely depreciated and just claim business miles.

                If that doesn’t work for you another option is personal lease and claiming back business miles as above. Or company lease or company purchase. Do what suits you .....some of your own research based on your own estimations will help.

                Comment


                  #9
                  Hmm, I thought electric cars were cheaper/exempt. Having checked Golf E, BMW i8, and Tesla, it seems not.....
                  And the lord said unto John; "come forth and receive eternal life." But John came fifth and won a toaster.

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                    #10
                    So the general consensus appears that it's not worth it.
                    'CUK forum personality of 2011 - Winner - Yes really!!!!

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