• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

Gifting a company car - corrections on way to do this correctly.

Collapse
This topic is closed.
X
X
Collapse
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    Gifting a company car - corrections on way to do this correctly.

    Hello ,

    My name is Bob aJob Jenkins.

    I own a business with £3.4m turnover and employs 42 staff.

    One of these statements is true.

    From 4 people out of scratch to 42 staff. Extremely well paid jobs some of them are on 80,000 per year. Now for the 1st time I'm getting a company car and am incensed at how I'm treated, or were treated online or rules or govt or people who just don't know. I had to find this all out myself. Golden rule.in life. If you want to do something do it properly. Firstly our accountant although giving us BIK rules and CO2 emissions based on g/km3 and corporation tax 19% rebate on VAT for 100,000 for electric car under first year allowance at 100% and 9% for Hybrids which basically means a car around 50g/km3 CO2 emissiom gets 9% corporation tax rebate on VAT on the car which means 9 grand roughly on a 100grand car.

    Following? Good. It means we get we grand back, the full 100%VAT of 19% on a 100k car means 19,000 back come April and we do our tax returns.

    The BIK on a PHEV is 2,000 per year. Not bad on an Audi Q7 PHEV Hybrid at 87,000. Meaning you only pay £200per month if the company pays or buys the car and gives it you. I confirmed this with an accountant on september 23rd 2021. However he then said more details is beyond him. Ie standard stuff.

    So I was thinking how do you gift a company car so you don't pay anything or very little? That's when the knives come out. Its unbelievable you make a turn over of 3.4million, employ over 42 staff, some on 80,000 a year and then be made to feel guilty, or a fraud, or a conman, or a dodger to finally pay yourself a little bonus. Our bonus so far has been zero. Actually, I'm fibbing. We got a 4K TV worth £700 for 2 years hard work inc weekends. Woo. Big spender.

    So for the 1st time we wanted to treat ourselves, buy nice cars and thats it. Carry on. The ONLY correct legal way I have found out how to do this, is remembering 2 things.

    1. Firstly you must be an idiot if you with 4 other directors from scratch make a business in 2 years that makes 3.4m , employs 42 ppl and do a bit of fraud. Really? Doing a bit of fraud is easy. However making a legitimate business as above is f***king hard. 100 times harder. So to cook the books or do something daft to jeopardise that is complete stupidity.

    2. As a 40% taxpayer on 95,000 a year (no bonus remember). The only way I have found this out is if you buy a Audi Q7 PHEV at 87,000. Vat is 14,500 which you get back April the following year as long as you buy it outright before April 2022 and file it you will get the rebate in full making the Q7 cost 72,500. So you get 15,000 off. Not bad. Following on the BIK on a Q7 PHEV is 2 grand a year as its a low emission car send qualifies for some electric car tax relief which makes your monthly bill for the car 200. If you don't want to pay 200 a month for a 90grand car others would have to pay 1200 per month for under a normal PCP you need shooting by firing squad. So assuming you think 200 a month BIK on a Q7 PHEV Hybrid that costs 87,000 in the showroom but costs the company actually 72500 come next April with the VAT claimed back you then pay a bonus of yourself of 72,500. You then pay 36,500 in tax at 50% for bonuses assuming you are a 40% tax payer as I am. So to make the car cost you free, which is basically the title of this thread and the whole point you pay yourself a bonus of 145,000. You get 63,000 a year from a normal salary of 95,000 , thats 33,000 in tax but then you pay yourself a bonus of 145,000 and when you factor PAYE and NI at 50% you are left with 72,500. The full cost of the car which cost the company 72,500. Of course the company can't pay you 72500 to buy the car as at the showroom you wouldn't get the year end April VAT reclaim at 14,500 so you'd pay the full 87,000 and wouldn't get the company discount.

    Has anyone found a better way? This is the only way i have found out how to gift yourself a company car legally free and not pay anything for it. Ie- a true bonus for all your hard work.

    If I have helped you, happy to do so. If only People truly helped each other. The world would be a much better place.

    Regards to all,
    Bob aJob Jenkins.

    #2
    tl;dr

    no you cannot just gift a company asset to yourself without attracting tax
    See You Next Tuesday

    Comment


      #3
      Originally posted by bobajobjenkins View Post
      War and Peace with some boosting that is hard to match with the stupidity of the rest of the post.
      WTAF were you thinking about and WTAF did you not ask a decent accountant what to do.

      What your company should have done / be doing is buying or leasing an expensive fully electric vehicle and providing it to you as a company car.

      That would give you the car you wanted for a personal cost of about £500 a year max in a worst case scenario (probably nearer £300).

      This really isn't that difficult to understand...
      merely at clientco for the entertainment

      Comment


        #4
        Originally posted by bobajobjenkins View Post
        Hello ,

        My name is Bob aJob Jenkins.

        I own a business with £3.4m turnover and employs 42 staff.

        One of these statements is true.
        Given the admitted ignorance of some pretty basic BIK tax laws in your post, I'm assuming it's your name that qualifies here.

        To summarise the rest of your post - it's almost like the tax laws have been written in such a way so that employers can't gift themselves/their employees cars without paying tax on the benefit. Crazy, eh?

        PS. I'd not say £80K is extremely well paid. Well above average, yes. Well paid, yes, but no more.

        PPS. As a business owner of a £3.4M turnover company, I'd not say that a £95K salary is doing yourself justice either.
        Last edited by Paralytic; 24 September 2021, 07:51.

        Comment


          #5
          Originally posted by Paralytic View Post

          Given the admitted ignorance of some pretty basic BIK tax laws in your post, I'm assuming it's your name that qualifies here.

          To summarise the rest of your post - it's almost like the tax laws have been written in such a way so that employers can't gift themselves/their employees cars without paying tax on the benefit. Crazy, eh?

          PS. I'd not say £80K is extremely well paid. Well above average, yes. Well paid, yes, but no more.

          PPS. As a business owner of a £3.4M turnover company, I'd not say that a £95K salary is doing yourself justice either.
          £3.4M turnover, but £1M losses...?
          Down with racism. Long live miscegenation!

          Comment


            #6
            You purportedly run a 3.4m company with 42 staff yet you think it's a smart move to ask a bunch of one man band contractors tax questions that your professionaly trained accountant says is beyond him?
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #7
              Troll.

              Comment


                #8
                Originally posted by zonkkk View Post
                Troll.
                you might very well think that, but I couldn't possibly comment in the professional forums.
                See You Next Tuesday

                Comment


                  #9
                  Envy and Jealousy in the air. Aside from genuine posters its clear that's manifested in the reply. To those sincere enough a lease isn't the best thing and outright purchase is the right thing. A 87k phev attracts 2400 BIK according to the accountant which is 200 odd ish a month. The car can be purchased outright factoring in 3 yes depreciation and because it will be sold at a loss (say 50k) the accountant then said there's no tax on earnings not a profit. A car gifted at 50k would attract tax probably 40% rate meaning 20k on the payroll for that bonus come the month its handed to you 3 years later. 3×12=36+5k deposit means on an 87k car - 5k =82. Take 36k off over 3 years = 47k. On tax thats probably 20k for you. 20k+36k = 56k. I havent even factored in the vat reclaim making it 72k purchase really, minus 5k deposit = 67k - 36k = 31k after 3 years. So you probably pay 14k tax on that. 36k+15k = 50 grand car that is 87,000 in the showroom. That kind of car you keep for a long time.

                  So really summarised I'm buying a 87k car for 50k. Not bad....

                  Comment


                    #10
                    The option 2 of course is dividend which is at 50%. Pay yourself a dividend of 180k. Tax off that makes it 90k. Buy the car outright. Probably simplest way.

                    Comment

                    Working...
                    X