What happens to my LTD (Car, equipment) when I move to IR35?

[cojak]

Assuming the changes come into effect, the 5% allowance disappears.

Well, unless you have a contract with a small company, if this the case you can decide on whether you are inside or outside, and if YOU decide you are inside THEN you will get the 5% expenses (as per JB’s post earlier).

It sounds bizarre to me, but there you go...

[jamesbrown]

Well, unless you have a contract with a small company, if this the case you can decide on whether you are inside or outside, and if YOU decide you are inside THEN you will get the 5% expenses (as per JB’s post earlier).

It sounds bizarre to me, but there you go...

Right, it is bizarre in its complexity, which is why this small company exemption won’t last, IMHO. They will want to end up with a single-tiered system.

[lifexplorer]

Couldn't the car leasing costs could be offset against prior profits made by the company while contracting outside IR35?

So if you stop earning income part way through your company financial year, but you're still paying the leasing costs, would think you'd still count the costs against prior profits within your company, and could even do a carry back of a year (not sure if you can do more) if your lease carried into your company's next financial year (so your losses due to car lease, etc. would carry back against profits the prior year).

Not an accountant though so definitely one to check with yours!

[cojak]

Couldn't the car leasing costs could be offset against prior profits made by the company while contracting outside IR35?

So if you stop earning income part way through your company financial year, but you're still paying the leasing costs, would think you'd still count the costs against prior profits within your company, and could even do a carry back of a year (not sure if you can do more) if your lease carried into your company's next financial year (so your losses due to car lease, etc. would carry back against profits the prior year).

Not an accountant though so definitely one to check with yours!

Provided you have enough money in the company to pay for the lease as well as the usual taxes.

[mudskipper]

Provided you have enough money in the company to pay for the lease as well as the usual taxes.

Difficult to see how it would not be a BIK - your business mileage is no longer an allowable expense.

[cojak]

Difficult to see how it would not be a BIK - your business mileage is no longer an allowable expense.

Ouch! I’d forgotten that.

[CanPayButWouldRatherNot]

at least with an electric motor the BIK wont be quite to bad

[WTFH]

at least with an electric motor the BIK wont be quite to bad

Not sure if it will be that simple - it’s a business asset being used purely for personal use.
The insurance for it will need to be purely personal use.
Check the lease to see if there is restrictions on mileage and the type of mileage.
And if it’s a car where you’ve claimed 100% of the VAT back saying it’s purely for business use, you might find you’ll owe at least 50% of the VAT to HMRC.

[northernladuk]

But isn't there that old catchall that you are still working on the business but still have no sales. They'd have to go in to exact journeys etc to prove. Quite a grey area and some attitude to risk plays.

[WordIsBond]

If you have the funds in the company to cover the lease, it may be worth doing an inside contract as a PSC, rather than umbrella. Then, it's clearly a legit BIK.