Leasing Car through Co, Low miles and save the whales Car...

[chaplic]

TCP, veering slight off topic but the ecoboost engine is amazing - my parents have one. It even sounds good.

I didn't understand your comment re NIC

My understanding is:

Company pays lease (say £200PCM) so overall corp tax liability is less.


My accoutnant chap can do so black magic with a bit of the VAT to save tuppence.

I pay BIK (say 11% Of 20% of p11d) - I may have that the wrong way round but I'm sure you get the gist

Someone pays insurance (good points there)

What else is there to consider?

[TheCyclingProgrammer]

A car loses loads of its value in the first 2 years. Either keep leasing or just get a slightly older car. Not being the first owner won't kill you.

I realise that, but I'm quite keen on the new 2014 EcoBoost model. I can accept the depreciation as part of the cost of ownership. Point is, I don't have to buy it, I can keep leasing, but if it proves to be reliable then I'd rather buy it at the end of the term and then keep it for as long as it runs.

Edit: actually, looks like its last years model so nearly new might be worth considering. Could get something £2-3k cheaper, or consider getting a Focus instead.

[TheCyclingProgrammer]

TCP, veering slight off topic but the ecoboost engine is amazing - my parents have one. It even sounds good.

I didn't understand your comment re NIC

My understanding is:

Company pays lease (say £200PCM) so overall corp tax liability is less.

My accoutnant chap can do so black magic with a bit of the VAT to save tuppence.

I pay BIK (say 11% Of 20% of p11d) - I may have that the wrong way round but I'm sure you get the gist

Someone pays insurance (good points there)

What else is there to consider?

I'm on FRS so no VAT savings to be had.

There's two parts to the BIK - the income tax side, which for a basic rate payer would be 20% of a percentage of the car's P11D value - about 11% for the Ford Fiesta I'm looking at. Another way of looking at this would be to reduce my personal allowance by the BIK amount; the net effect is that while I don't actually end up with a tax bill, it does reduce the amount of dividends I can take out before hitting the higher rate tax threshold.

The second side is the Employers Class 1A NIC on the benefit, 13.8%.

The corporation tax saving and basic rate tax on the benefit cancel each other out (or if I do a salary sacrifice it makes no difference overall), so the extra cost to the company is the 13.8% NI (minus 20% of this as it's CT deductible).

So not a great extra cost but it does reduce my overall take-home by slightly more than if I paid for the lease personally (and there would be no NIC bill either then) and then adds the complications of getting insurance. It also rules out getting a PCP deal.