Reply to: Car insurance when leasing a car through the company

[WTFH]

It's not a problem - I'm a PCP fiend and have financed some overpriced metal over the years, and never been any issues with acceptance, even when I've probably stretched myself to the limit (I've also had multiple PCP's in my name simultaneously).

Yes, never been a problem for me either. There’s a big difference between PCP on a car and getting an unsecured interest free bank loan.

A car finance company will give a PCP to almost anyone - if the person doesn’t pay, the finance company take the car back.

A bank not giving a 0% loan might have given a loan at 5%. Or they might have given a loan if it was secured against something.

The other poster needs to understand a little about finance and how it works.

[fiisch]

Yes valid point regarding the IR35 changes next year. I think I'll stick to a Personal vehicle in this case.

As for PCP finance plans they aren't contractor friendly as I believe the finance approval is normally based on salary alone. When you pay yourself around 11k a year in terms of salary it doesn't look good for finance companies. Barclays declined a 0% APR deal once when I needed to replace a gas boiler for 4k so I had to pay 4k in cash. I'm guessing someone who earns 11k a year was flagged as not being able to re-pay a 4k loan.. Dividends are not taken into account. This is despite having a top credit rating (they don't take into consideration company profits unfortunately)..

It's not a problem - I'm a PCP fiend and have financed some overpriced metal over the years, and never been any issues with acceptance, even when I've probably stretched myself to the limit (I've also had multiple PCP's in my name simultaneously).

[freelancelife]

Yes valid point regarding the IR35 changes next year. I think I'll stick to a Personal vehicle in this case.

As for PCP finance plans they aren't contractor friendly as I believe the finance approval is normally based on salary alone. When you pay yourself around 11k a year in terms of salary it doesn't look good for finance companies. Barclays declined a 0% APR deal once when I needed to replace a gas boiler for 4k so I had to pay 4k in cash. I'm guessing someone who earns 11k a year was flagged as not being able to re-pay a 4k loan.. Dividends are not taken into account. This is despite having a top credit rating (they don't take into consideration company profits unfortunately)..

You have more options than that. Why are you ruling out:
3. Buying second hand with cash
4. Getting a car on a PCP (or other payment scheme)

Given the possible IR35 changes next year, I would be wary of getting the car through your Ltd.

[WTFH]

My options are either
1) Business Car Lease by Ltd Company
2) Private Purchase using personal loan (to get a more reliable vehicle for business travel)

You have more options than that. Why are you ruling out:
3. Buying second hand with cash
4. Getting a car on a PCP (or other payment scheme)

Given the possible IR35 changes next year, I would be wary of getting the car through your Ltd.

[freelancelife]

Interesting comments here. The car I use for business has gone in the garage and I've been quoted £3000 to fix it :-( . So I'm thinking about options for a replacement vehicle for business use in case I have to scrap this car.

My options are either
1) Business Car Lease by Ltd Company
2) Private Purchase using personal loan (to get a more reliable vehicle for business travel)

I've been told by my accountant today that I can claim back 100% VAT on a company car lease. The car would be kept in my own driveway.
He said that as long as I kept a log of mileage with receipts showing that the car is only being used for business use (to client site and back) that 100% of VAT can be claimed.
I'm slightly concerned however reading comments on various forums stating that BIK would apply just by parking the car in my own driveway...

I already own 1 car ( An older personal vehicle - paid off ) - But not suitable for long business commutes.
So I will have 2 cars registered under my name.

Is my accountant right in saying that 100% VAT can be claimed back or can I only claim 50% VAT. If you can only claim 50% VAT then it's probably easier to just get a personal bank loan and buy the car in cash. Then after 3 years at least you still have an asset you can sell (even if you only get half of what you paid for it)..

If I have 2 cars registered under my name couldn't I argue that I use a separate vehicle for personal use?

[washed up contractor]

But that's not what a hybrid is designed to do?

A hybrid is designed to do the numerous starts from standstill in (mainly) city traffic or use the severely limited range battery when driving short journeys at 30mph or less. Hasnt stopped a lot of people buying them though.

So your suggestion is?

A diesel as I suggested in my post. The caveats being if you need to drive into London (or, other cities contemplating a 'diesel' charge) is you need to go EU6 to avoid excessive charges. If you dont intend driving in London (or the other potential charging cities), you could get away with a more 'dirty' diesel.

Of course you could buy a petrol car but there would then be a significant hike in fuel costs.

[Lance]

Driving 35k miles a year means a diesel is the only viable option although a mondeo at 5 grand is unlikely to meet diesel charging regimes in London when introduced and a few other cities considering them.

Although mileage allowance may equate to just shy of 11 grand, you would be paying more than that for diesel fuel and even more for petrol. Plus of course, a 5k modeo could end up with other big maintenance and service bills.

A hybrid isnt worth considering since most only do about 20 - 25 miles on battery while in reality, travelling long distances means the battery pack would hardly be used.

Some electric vehicles do comewith a range extender engine to charge the batteries but even so, arent going to be a serious contender for someone doing 35k miles a year.

So your suggestion is?

[northernladuk]

A hybrid isnt worth considering since most only do about 20 - 25 miles on battery while in reality, travelling long distances means the battery pack would hardly be used..

But that's not what a hybrid is designed to do?

[stek]

35,000 miles......
Buy a £5k Mondeo and have all that lovely tax free mileage allowance.
10k @ 45p = £4,500
25k @ 25p = £6,250
= Total of £10,750 per year.

Less the actual cost of the fuel.....

[washed up contractor]

Fact is I drive 35,000 miles in average for business purposes per year for the last 7 years, I have another car for family purposes, so I can easily use it for business purposes only. But if there is a stupid rule you can't park it on your own drive way even if your office is your home address or they tax the tulip out of you, I suppose I can forget about driving a company car. An electric car wouldn't get me to my clients and back in one day without recharging, hybrid might be an option, have never really looked into that.

35,000 miles......
Buy a £5k Mondeo and have all that lovely tax free mileage allowance.
10k @ 45p = £4,500
25k @ 25p = £6,250
= Total of £10,750 per year.

Driving 35k miles a year means a diesel is the only viable option although a mondeo at 5 grand is unlikely to meet diesel charging regimes in London when introduced and a few other cities considering them.

Although mileage allowance may equate to just shy of 11 grand, you would be paying more than that for diesel fuel and even more for petrol. Plus of course, a 5k modeo could end up with other big maintenance and service bills.

A hybrid isnt worth considering since most only do about 20 - 25 miles on battery while in reality, travelling long distances means the battery pack would hardly be used.

Some electric vehicles do comewith a range extender engine to charge the batteries but even so, arent going to be a serious contender for someone doing 35k miles a year.

[Lance]

Fact is I drive 35,000 miles in average for business purposes per year for the last 7 years, I have another car for family purposes, so I can easily use it for business purposes only. But if there is a stupid rule you can't park it on your own drive way even if your office is your home address or they tax the tulip out of you, I suppose I can forget about driving a company car. An electric car wouldn't get me to my clients and back in one day without recharging, hybrid might be an option, have never really looked into that.

35,000 miles......
Buy a £5k Mondeo and have all that lovely tax free mileage allowance.
10k @ 45p = £4,500
25k @ 25p = £6,250
= Total of £10,750 per year.

[SueEllen]

I'm sure everytime some asks this the answer is always unless it's a super low emissions car it's not worth it. If there was any clever work around we'd all be doing it. The fact that none of us are speaks volumes.

On the hilux cab thing. I thought HMRC would have an issue as a one man band contractor does not need a van so wouldn't pass any kind of inspection? Could be wrong on that.

Not strictly true - a minority of people do need equipment for their job.

[Eirikur]

I'm sure everytime some asks this the answer is always unless it's a super low emissions car it's not worth it. If there was any clever work around we'd all be doing it. The fact that none of us are speaks volumes.

Fact is I drive 35,000 miles in average for business purposes per year for the last 7 years, I have another car for family purposes, so I can easily use it for business purposes only. But if there is a stupid rule you can't park it on your own drive way even if your office is your home address or they tax the tulip out of you, I suppose I can forget about driving a company car. An electric car wouldn't get me to my clients and back in one day without recharging, hybrid might be an option, have never really looked into that.

[northernladyuk]

I'm sure everytime some asks this the answer is always unless it's a super low emissions car it's not worth it. If there was any clever work around we'd all be doing it. The fact that none of us are speaks volumes.

On the hilux cab thing. I thought HMRC would have an issue as a one man band contractor does not need a van so wouldn't pass any kind of inspection? Could be wrong on that.

Annoyingly this article doesn't address the tax position for company directors. The reclaimable VAT is interesting as well.

Double-cab pick-up truck tax benefits explained | Auto Express

[northernladuk]

Hmm if that is correct it just threw the business case out, of course I will check with my accountant, but private lease is back on the list of options again

I'm sure everytime some asks this the answer is always unless it's a super low emissions car it's not worth it. If there was any clever work around we'd all be doing it. The fact that none of us are speaks volumes.

On the hilux cab thing. I thought HMRC would have an issue as a one man band contractor does not need a van so wouldn't pass any kind of inspection? Could be wrong on that.