Company vehicle part-ex of private vehicle

[Lance]

I am thinking of getting a company vehicle for combined business and personal use.
Probably a twin-cab redneck wagon (Amarok, Navara, Hilux etc.), or a VW transporter van type thing.
Second hand, maybe around the £10 - £15k price point.
Bought outright by the company.
I know about the BIK, capped at £3.5k

The question is whether I can part ex my personally owned vehicle, and how do I account for it?
Common sense would say that I simply credit my DLA with the part ex-value of the car, and pay it back. But I'm not sure.

No I've not asked my accountant. Yes I will ask, to verify any sensible suggestions here. I'm just spit-balling right now.

[ladymuck]

Is there a way the BIK can be reduced due to the contribution you've made on the purchase, or does it work on the list price? Have never bothered with company cars so genuinely have no clue.

If that's not a thing then I'd treat the value achieved from the part-ex the same as if you'd put in the cash yourself; so credit the DLA and draw it down when you need it just as you said.

[Lance]

Is there a way the BIK can be reduced due to the contribution you've made on the purchase, or does it work on the list price? Have never bothered with company cars so genuinely have no clue.

If that's not a thing then I'd treat the value achieved from the part-ex the same as if you'd put in the cash yourself; so credit the DLA and draw it down when you need it just as you said.

BIK is based on the brand new value of the car. It’s one reason I’ve never bothered. I always have cars a few years old so paying tax based on the new price would be irksome.

Commercial vehicle BIK is capped though.

[northernladuk]

As you say I'd imagine you get the value of the part ex portion and add that to the Directors Loan. The car dealer is (kind of) give you personally cash for the old car which you then give to the business to reduce the cost of the new one so DL should cover that nicely.

I did think that even with BiK cap this wasn't an efficient option and not for older second hand stuff. I'm sure we've had exactly this discussion and in it there was the issue of an IT contractor not needing a van/twin cab either but dunno if that's a rule. Can't find anything on it which probably says it's not an issue.

Be interested in a break down of the numbers when you get them, just for reference when people talk about twin cabs again. Lots of posts saying just do it personally posts but no numbers so far.

[Lance]

As you say I'd imagine you get the value of the part ex portion and add that to the Directors Loan. The car dealer is (kind of) give you personally cash for the old car which you then give to the business to reduce the cost of the new one so DL should cover that nicely.

I did think that even with BiK cap this wasn't an efficient option and not for older second hand stuff. I'm sure we've had exactly this discussion and in it there was the issue of an IT contractor not needing a van/twin cab either but dunno if that's a rule. Can't find anything on it which probably says it's not an issue.

Be interested in a break down of the numbers when you get them, just for reference when people talk about twin cabs again. Lots of posts saying just do it personally posts but no numbers so far.

the broad brush numbers I have are...

BIK of £3.5k means extra tax on SA of £1,400 (assumed 40% threshold).
So that's £4,200 over 3 years. I normally plan on a £10k car, with £1,000 a year of tax and insurance, and £500 a year of bills, and it be worth £4k at the end. So that would be £3,500 a year.

For personal tax/cost a company vehicle will be less than half the price. But that's before I factor in the cost of the vehicle and the resale. Assuming £10k buy, same insurance/tax, same bills, same resale price. That's a cost of £3,500 a year to the company. I'm ignoring VAT right now.

If I took the £3,500 p.a. out of the company to pay for the car I would have to pay the same tax of £1,400 as I would on the BIK. So it's as broad as it is long. It costs my company £3,500 a year either way. And costs me £1,400 a year either way.

But then I can get the VAT back on all fuel (I think) not just business miles using a fuel card.
Also VAT back on the purchase.
And save CT on the vehicle purchase.
Also if it ends up costing more due to unforeseen circumstances VAT and CT savings increase.

The more expensive the vehicle the better the savings as a company.

That's what's in my mind anyway.

EDIT. Actually the tax on personal purchase is lower as it's 32.?% not 40%. Either way it's marginal.