Company Car

[sumez]

Hello all,
I've been contracting for about a month now and wanted to know if it would be beneficial if I bought a car through the company.

Would I personally get taxed more as it is seen as a benefit?

[Kyajae]

Would I personally get taxed more as it is seen as a benefit?

Yes

[THEPUMA]

Yes you would but sometimes the additional personal tax incurred is outweighed by the corporation tax saving. It depends on the car.

Most big cars (BMW's, Mercs, Volvos etc) are better off owned personally but some small cars and most that qualify as vans (some double cab pick-ups eg Nissan Navarro, Mitsubishi Warrior etc) are better off run through the company.

[Lockhouse]

Yes you would but sometimes the additional personal tax incurred is outweighed by the corporation tax saving. It depends on the car.

Most big cars (BMW's, Mercs, Volvos etc) are better off owned personally but some small cars and most that qualify as vans (some double cab pick-ups eg Nissan Navarro, Mitsubishi Warrior etc) are better off run through the company.

The rules for vans have changed - if you have any private use there's a big BIK charge nowadays.

[THEPUMA]

The rules for vans have changed - if you have any private use there's a big BIK charge nowadays.

Still usually worthwhile. The BIK is not as big as that of an equivalent car, usually.

[Cooperinliverp00l]

I was about to get a new car with the intention of buying it personally. THe garage said that i should look into getting it through the company as i can can do something with the VAT.

It was a Mitsubishi Animal OTR 26k inc VAT. So what sort of saving would i get going through company and could it ever be used for private use ?

[THEPUMA]

I was about to get a new car with the intention of buying it personally. THe garage said that i should look into getting it through the company as i can can do something with the VAT.

It was a Mitsubishi Animal OTR 26k inc VAT. So what sort of saving would i get going through company and could it ever be used for private use ?

Ask them whether or not it qualfies as a van. If so, you will be able to recover the VAT and the benefit-in-kind will either be nil (only incidental private usage), £3,000 pa (non-incidental private use, no private fuel provided) or £3,500 (non-incidental private use, private fuel provided).

My gut instinct is that you are better off buying this through the company if it qualifies as a van but you would need to get your accountant to crunch the numbers based on your specific circumstances.

[Red 7]

Ask them whether or not it qualfies as a van. If so, you will be able to recover the VAT.

Am I correct in assuming that the VAT can't be recovered if you're on FRS, or are there different rules for 'large' purchases?

[Vito]

You can reclaim for any purchases over £2k I think...

[THEPUMA]

Am I correct in assuming that the VAT can't be recovered if you're on FRS, or are there different rules for 'large' purchases?

If a cpaital asset with cost exceeding £2,000 is purchased, VAT can still be recovered under the FRS.