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

[chaplic]

Evening All.

I do very few company miles and I am thinking of a new motor.

Lexus seem to do some cracking deals on their hybrid cars in terms of business lease (e.g. they are advertising a cooking model at £219pcm + VAT) plus BIK around 11%, so if one can stay in 20% tax bracket then seems to me to be a new motor for not very much at all - couple of hundred bucks or so expense to the firm and less than a hundred bucks a month in BIK?

This all feels too good to be true which leads me to think of something I've missed. I've read many threads on here where the focus is on buy private and expense back, but that wouldn't really get me far here so looking for the assembled big brains here to tell me the errors of my ways.. (Or I'm a genuis and thought of something that noone else has)...

[northernladuk]

SJD have an interesting comparison on their site but I don't think it gives you the answer you are looking for...

Buy, HP or lease? - Accountants UK - SJD Accountancy

Can you guarantee you will be doing low mileage for the next two years though? As soon as you go over the agreed amounts the payment per mile will ruin any saving.

[TheCyclingProgrammer]

I'm also strongly considering a lease as my car is currently in the garage and it may be terminal (possible timing chain jumped).

Everything I have read indicates that company cars aren't usually worth it but thinking it might be in my case. I have low mileage, approx 5K a year and very little business mileage. Would be looking at a low emissions car. Also, with a possible mortgage application on the cards would probably be best to not have a lease agreement in my own name.

Waiting to see what he accountant says.

[TheCyclingProgrammer]

Well, I've run some figures using my modified salary calculator spreadsheet and if my calculations are correct, it looks like what they say is true re: leasing personally vs through company.

https://docs.google.com/spreadsheet/...2c&usp=sharing

By those calculations, on a 1.25 Ford Fiesta, leasing through the business would cost the company an extra £1350 a year after allowing for the extra Class 1A NIC and corporation tax saving, and also reduce our annual household take home £900 more than if I paid for the lease myself!

On that basis, the personal lease route looks like the right choice. My mortgage broker has also got back to me and said it shouldn't have too much of an affect on our mortgage application as the lender he has chosen has offered to lend more than we need anyway.

A more eco-friendly car might reduce the BIK charge a bit but the lease cost would be higher.

EDIT: looks like with a slightly eco-friendlier car and by sacrificing a portion of my salary I can get the costs down to be about the same without a reduction in take-home overall. Argh, so many variables to this...

Are there any other caveats I should be aware of when leasing through the company? Will it have a negative effect on insurance premiums? Anything else to consider?

[Craig at Nixon Williams]

I have just quickly done the calculation based on a lease cost of £2,087.28, a BIK value of £2,478.40 and dividends up to the higher rate threshold and you do come out slightly better off if you do it personally.

It can be very difficult (and expensive to insure a company car) in comparison to doing it personally, so that is definitely a factor to consider!

Craig

[eek]

I have just quickly done the calculation based on a lease cost of £2,087.28, a BIK value of £2,478.40 and dividends up to the higher rate threshold and you do come out slightly better off if you do it personally.

It can be very difficult (and expensive to insure a company car) in comparison to doing it personally, so that is definitely a factor to consider!

Craig

You would also lose your no claims discount after a maximum of 18 months....

[northernladuk]

You would also lose your no claims discount after a maximum of 18 months....

Very good point. This happened to me after I left permie land and had to give the company car back.

[ContrataxLtd]

You would also lose your no claims discount after a maximum of 18 months....

Most insurance companies normally let you take out a personal policy on the company car provided they are aware of the actual ownership, who the registered keeper is etc. and it's correctly covered for business use. This way you can use and maintain your no claims discount.

If the company then pays for the policy it would need to go through payroll or P11d so it's probably easier to pay for the insurance premiums personally to avoid the added tax implications (although these can be worked around in most cases).

Hope this helps.

Martin
Contratax Ltd

[TheCyclingProgrammer]

Thanks for the input all. Have decided I'm probably not going to go down the company lease route, mainly due to the insurance as mentioned above. I've had one quote and it was silly money.

I'm now investigating going down the PCP route anyway to give myself the option of buying the car in 3 years, which, if business is good, should be easily covered by an extra divi. Test driving one of those new Ford Fiesta EcoBoost's tomorrow.

Just waiting for a scrap quote for my current car...my first car too. Sad day.

[SueEllen]

I'm now investigating going down the PCP route anyway to give myself the option of buying the car in 3 years, which, if business is good, should be easily covered by an extra divi. Test driving one of those new Ford Fiesta EcoBoost's tomorrow.

Just waiting for a scrap quote for my current car...my first car too. Sad day.

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.