Reply to: Company Car

[tim123]

I thought the whole situation on pick-ups was being changed so that they cannot benefit from the £500 falt fee.

Also, if you are at a site for over 24 months, then you cannot claim the milage thing. So in those cases you are better off having a company car and a low paye wage. A high percentage of feck all is still feck all.

I don't see how the low wage comes into it (unless your total income, including the value of the car, is low). Unless I misunderstood, the scale charge for fuel is between 2.2K and 5K (depending upon the car). So, even at 22% tax, plus 11% ERNI, one pays between 750 pounds and 1.5K to HMG just for the benefit of someone else putting fule into their car. But that someone else is our own company, so it's still nominally our money.

Whether this is a good deal for an individual, depends upon how many miles they do, not just how much they earn.

If our government really wanted to cut emissions then they would look again at the company car thing. I would be more than happy to get shut of my 6 year old Mondeo and replace it with a more efficient 2006 version.

They have. New cars are based upon emissions, so they are encouraging new buyers to choose sensibly. But it doesn't make environmental sense to encourage owners of older, but still servicable, cars to scrap them and buy new ones. There's an environmental cost to making the car that has to be considered.

tim

[BoredBloke]

I thought the whole situation on pick-ups was being changed so that they cannot benefit from the £500 falt fee.

Also, if you are at a site for over 24 months, then you cannot claim the milage thing. So in those cases you are better off having a company car and a low paye wage. A high percentage of feck all is still feck all.

If our government really wanted to cut emissions then they would look again at the company car thing. I would be more than happy to get shut of my 6 year old Mondeo and replace it with a more efficient 2006 version.

[Nixon Williams]

Yes I can confirm that if you are charged VAT then this can be reclaimed even if you are on the Flat Rate Scheme.

Alan

[Viktor]

Pick ups can be classed as a van and so more beneficial.

You can reclaim the VAT assuming that you are not on the Flat Rate scheme and all costs associated with the veghicle can be paid by the company.

Alan

So if I am on flat rate VAT why I can't reclaim VAT? The pick-up is a capital item above £2000... or am I missing something?

Viktor

[Nixon Williams]

Is this situation the same if you buy a company pick-up, e.g. Ford Ranger? As far as I know pick-ups are actually vans for tax purposes and you can reclaim VAT...

Pick ups can be classed as a van and so more beneficial.

To qualify as a van it must be able to carry 1000kg as per the vehicle spec. If it has a cab added to the back, the payload must be at least 1045kg as the extra weight is deemed to be 45kg!

You can reclaim the VAT assuming that you are not on the Flat Rate scheme and all costs associated with the veghicle can be paid by the company.

The tax situation is changing very soon so there will be more tax to pay that at present and with the Green issues being in the news the tax situation may get worse.

I hope this helps, a few of our clients do operate pickups.

Alan

[tim123]

Is this situation the same if you buy a company pick-up, e.g. Ford Ranger? As far as I know pick-ups are actually vans for tax purposes and you can reclaim VAT...

I presume that this is a 'twin cab' pickup. The rules were changed some years ago so that only 'genuine' pickups counted as vans, and the "it's a car with a flat bit where the boot should be" type, are taxed as cars.

As has been noted, the tax on Vans changes next year so that they are more in line than cars (but IIRC still cheaper).

tim

[EqualOpportunities]

Is this situation the same if you buy a company pick-up, e.g. Ford Ranger? As far as I know pick-ups are actually vans for tax purposes and you can reclaim VAT...

I think that you're correct - but I also am under the impression that, whilst VAT will still be reclaimable, these things are soon going to be taxed as cars. One for Darren, methinks...

[Viktor]

Generally there are few occassions where a company car for a contractor is a good choice.

There are various taxes imposed, a tax charge on the user, the company pays employers NIC, there are restrictions on the capital allowances/lease costs, no VAT can be reclaimed on purchase etc.

Alan

Is this situation the same if you buy a company pick-up, e.g. Ford Ranger? As far as I know pick-ups are actually vans for tax purposes and you can reclaim VAT...

[Nixon Williams]

If I buy a car personally, I cannot reclaim the VAT and nor can the company, so that's neutral.

What is the capital restriction? Can my ltd go out buy a car (new or 2nd hand) outright?

There must be reasons why so many companies offer company cars to employees rather than insist on paying a car allowance?

Is it still biased to private ownership if the car has very high running costs (say a Porsche), where the paphetic 40p per mile doesn't even cover the cost of a set of tyres?

The Revenue assume any car with a list price in excess of £12000 is a luxury car, so if the company buys it the maximum capital allowances each year are limited to £3000 per annum.

If you do not own the company my advice could be different, company cars may be beneficial if you are not paying the bills and company tax with the car. Also some employees prefer the ease of a company car, even though it is more expensive.

I mentioned that every case is different so it may be beneficial, remember that the benefit is based on the LIST PRICE of the car when new and the CO2 emmissions, so an expensive, fuel hungry cars mean large tax bills!

I hope this helps!

Alan

[Nixon Williams]

If your earn under £7,500 pa there is no additional personal tax to pay.

And what sort of car do you have to cost so much to change a cam belt?

Not sure where you get this idea from!

Perhaps you are thinking that a P11d (statement of benefits) is only completed if the salary exceeds £8500? This also applies to Directors and even if you were not a director AND on a salary less then £8500, the car would be declared on a P9D.

Alan

[Paddy]

I'm looking for information regarding having a company car vs private use.

I know there is company car tax to pay, and you don't get much back per mile for fuel, but all repairs and servicing can come out of untaxed company income rather my take home pay.

Is this correct?

I ask as my next service (inc cam belt change and some repairs and tyres) are going to cost me about £2000+ and if the company were paying it would be essentially tax free.

Has anyone factored into the company car vs private car debate the fact that car servicing and repairs is bloody expensive these days?

If your earn under £7,500 pa there is no additional personal tax to pay.

And what sort of car do you have to cost so much to change a cam belt?

[EqualOpportunities]

I did. I sold the Ferrari and bought a Porsche.

Furry Muff.

[DimPrawn]

Generally there are few occassions where a company car for a contractor is a good choice.

There are various taxes imposed, a tax charge on the user, the company pays employers NIC, there are restrictions on the capital allowances/lease costs, no VAT can be reclaimed on purchase etc.

Claiming a tax free mileage allowance is mostly the better option.

All cases are different but I cannot remember the last time we did the calculation for a client that it was better to have a company car.

Alan

If I buy a car personally, I cannot reclaim the VAT and nor can the company, so that's neutral.

What is the capital restriction? Can my ltd go out buy a car (new or 2nd hand) outright?

There must be reasons why so many companies offer company cars to employees rather than insist on paying a car allowance?

Is it still biased to private ownership if the car has very high running costs (say a Porsche), where the paphetic 40p per mile doesn't even cover the cost of a set of tyres?

[ratewhore]

I was discussing this with my accountant when I took on a company car. She basically said when you own the business (as opposed to being a permie with a company car) there isn't a lot in it.

For example, the difference between leasing my car privately or through the company equated to about £50 per month when you took into account the extra divvys I would need and tax etc. But of course, as it's through the company, my insurance goes through the books as does any other motoring costs...

HTH

[DimPrawn]

Get a cheaper car you flash barsteward.

I did. I sold the Ferrari and bought a Porsche.