company car

[chuddy]

If a company wants to sell a company car to an employee then how much can it sell the car for without the employee incurring any NICs or Income Tax? If it is for "fair market value" then how do I work this out?

Also, any idea how to arrange insurance for a company car?

I was just thinking... if my company owns a car that is used EXCLUSIVELY for business then I can claim VAT back on this. The company will also have profits lowered with the depreciation (where do I get the figures to work this out??), servicing, fuel, road tax, interest payments on the money that was used to buy the car and insurance payments. My company could then claim the 40 pence per mile from the client.

[Sockpuppet]

1. Get a Glass guide or one of the numerous other black cooks that people use to value the car.

2. Phone up the big brands (or a broker) and say I'm looking for some corporate insurance. Google is your friend.

3. Again refer to book in 1. If its just you in the company I really woundnt suggest that you do this. If a hell of a strech to tell hector that you are using the car purely for business trips (according to the accountant).

The general consesus is that taking 40p/mile from the company is the better way to get a car as the BIK you will suffer.

I'm not 100% sure but unless you "offically" work at home you'd have to leave the car at your clients offices otherwise its not 100% for business use.

[chuddy]

Hi Sockpuppet,

Thanks for the reply. I was just totting up the costs of running a car and there didn't seem to be much point in just claiming the 40p a mile since it would probably cost more than that when considering servicing/fuel/insurance/depreciation and cost of capital.

I just thought that maybe there would be some advantage in possibly owning 2 cars (one of which is purely for business and the other is purely personal) and being able to claim VAT and 100% hybrid allowance on the car + reduced VAT on the fuel + expense the interest cost of a loan + have the company take the hit on servicing/AA/depreciation. Surely Hector would be convinced when he sees that I have 2 cars!

Sounds like I need to sit down and number crunch before I know which is the best option :P

Cheers!

[chuddy]

Oh, and what is BIK?

[The Lone Gunman]

Oh, and what is BIK?

Benefit In Kind.

If your company supplies you with something that the IR feel is a financial benefit then you should pay tax on it. Cars are a BIK.

Not being nasty here, but you could do yourself some good by using google and visiting the IR web site which explains most of its rules.

HTH

[tim123]

I don't see how this works at all.

Either you need a new car to do the miles, or you don't.

If you don't actually need the car (because you already have one) then it cannot be more cost effective to get a second one for company use only and the the taxman isn't going to believe that you have done so, so he will tax you on it.

Or

If you don't need a new car (and you go and buy one) then it will be a taxable car anyway.



tim

[chuddy]

OK, understand about BIK and how the value of the car to the employee is worked out etc... however, this is only relevant for cars that are given to employees.

What I am suggesting is that my company owns a car that can only be used for business purposes - i.e. there is no BIK to an employee using it. If they are making a personal trip then they are not allowed to use the car. I can maintain a strict mileage log and the clock on the car will reflect this. By doing this, I will be able to expense all the associated running costs of the car before corporation tax (fuel, loan interest, servicing, insurance, depreciation, AA, 100% capital allowance for hybrid and road tax) and also claim back full VAT on the car + partial VAT on the fuel. The only downside that I can see is that the capital allowance and VAT will have to be repaid to the IR when the car is disposed of.

In the end I may just decide to take public transport and ride a pedal bike to save the world lol. Just a thought exercise :P

[simondolan]

The Revenue will not accept that there is no private use, and indeed the car would just have to be "available" for private use for the BIK rules to kick in.

It would be extremely difficult to argue against this if you are a contractor working on clients site and commuting from home. The fact that the car would be parked overnight at your home would mean that it would be "available" for private use.

OK, understand about BIK and how the value of the car to the employee is worked out etc... however, this is only relevant for cars that are given to employees.

What I am suggesting is that my company owns a car that can only be used for business purposes - i.e. there is no BIK to an employee using it. If they are making a personal trip then they are not allowed to use the car. I can maintain a strict mileage log and the clock on the car will reflect this. By doing this, I will be able to expense all the associated running costs of the car before corporation tax (fuel, loan interest, servicing, insurance, depreciation, AA, 100% capital allowance for hybrid and road tax) and also claim back full VAT on the car + partial VAT on the fuel. The only downside that I can see is that the capital allowance and VAT will have to be repaid to the IR when the car is disposed of.

In the end I may just decide to take public transport and ride a pedal bike to save the world lol. Just a thought exercise :P

[DimPrawn]

This 40p a mile thing.

If you look at any car magazine, you'll see that 40p a mile doesn't really cover fuel, servicing, insurance, depreciation, repair costs etc anymore unless you happen to drive a 600cc city car.

Most cars cost about 50p a mile to run now and some as high as a couple of quid.

How comes we are stuck with 40p a mile? Isn't it about time this reflected the modern cost of running a car, which is sky high?

[chuddy]

BMX it is then...