Reply to: EV Corp Tax relief, if bough in 1 financial year and car delivered in the next FY

[northernladuk]

I think that was Tarby

I believe the actual term he used was 'If it flies, floats or you can rent it, whip it and f**k it'

[ladymuck]

ignoring finance because you can afford to pay cash is not necessarily the best idea.
Particularly with houses or cars. (or planes, boats and women - a wise man said "If it flies, floats or f**ks, rent it")

I think that was Tarby

[AQAsh]

This link might help:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800



Sounds to me like this is a grey area that only an experienced accountant will be able to advise on.

ignoring finance because you can afford to pay cash is not necessarily the best idea.
Particularly with houses or cars. (or planes, boats and women - a wise man said "If it flies, floats or f**ks, rent it")

lol!! Thats a funny quote!

[Lance]

My OP is totally fine, only advantage for me was on the Tax relief, but then looking at the EV I guess they are first gen and will depreciate quite hard. Hence the reason of thinking to cancel.

You sure you know what OP means?
Not sure what you think 1st gen EV is either. I would not call a BMW i4 1st gen.
As for depreciation, yes all new cars depreciate. It's one reason you want to do this right, and why finance is often a better option especially for a business

[Lance]

Just to add, I always buy my cars Cash as the old saying goes " Buy only what you can afford" so finance / lease is off the table for me.

ignoring finance because you can afford to pay cash is not necessarily the best idea.
Particularly with houses or cars. (or planes, boats and women - a wise man said "If it flies, floats or f**ks, rent it")

[Lance]

First of all, thanks for the responses. Just to set the record straight,
1) No I am not winding the company up
2) I have a healthy bank Balance
3) I am not contracting as working on a separate Start-up and looking to close a round shortly. ( P.S) for the record not had issue with finding gig's so far thankfully.

The reason I wanted to know was simply which year does the corporation tax relief do I get as I will be beneficial.
The invoice date is in April and my end of year is end of May.

are you sure it's an invoice?

Normally a business cannot invoice another business until the goods have been delivered. Hence my suggestion that it is a deposit.
If you have a piece of paper, that says Invoice, and had a VAT # and a VAT amount paid then I believe that putting it against the CT for that invoice date is valid.



Anyway.... that all being said..... there is a fundamental difference. This is a car and they are treated differently to common or garden business costs....

Company car tax for business owners - Tax Guides (listentotaxman.com) this tells you a familiar story.

You get your dream car and it’s saving you money? With an on-the-road price of £36,875 and Corporation Tax at 19% you’re saving over £7,000, right? “I’m sure my accountant could tell me”, you think to yourself...

Five minutes later, you’re in the office getting ready to sign the paperwork. However, that little voice at the back of your head has now started panicking. “Maybe I should check this out with my accountant… it seems too good to be true”

That niggling voice, my friend, has just saved you thousands of pounds.


<snip>


Capital Allowances, however, are slightly different.
Capital Allowances require you to spread the cost of an asset over the expected useful life of the asset. The percentage that you can claim each year is decided in advance by HMRC. For the tax year 2019/20 the rates are as follows:

For cars with emissions of 110g/km or higher

6%

For cars with emissions between 51 and 110g/km

18%

For new cars with emissions of 50g/km or less

100%

You can claim a percentage of the cost for each year that you own the vehicle, until you have cumulatively claimed the full amount.


<snip>


A business cannot normally recover VAT on the purchase of a new car that is bought outright. The only circumstances under which you can recover VAT is if you can prove that the car is for business use only.

you sure you want to ask strangers on the internet rather than an accountant?

[AQAsh]

This link might help:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800



Sounds to me like this is a grey area that only an experienced accountant will be able to advise on.

I got £5 that says this a poor assumption. If OP was sitting pretty they wouldn't be considering canceling the car.

My OP is totally fine, only advantage for me was on the Tax relief, but then looking at the EV I guess they are first gen and will depreciate quite hard. Hence the reason of thinking to cancel.

[AQAsh]

This link might help:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800



Sounds to me like this is a grey area that only an experienced accountant will be able to advise on.

thank you this link clears many of my questions. Appreciated.

[AQAsh]

First of all, thanks for the responses. Just to set the record straight,
1) No I am not winding the company up
2) I have a healthy bank Balance
3) I am not contracting as working on a separate Start-up and looking to close a round shortly. ( P.S) for the record not had issue with finding gig's so far thankfully.

The reason I wanted to know was simply which year does the corporation tax relief do I get as I will be beneficial.
The invoice date is in April and my end of year is end of May.

For those who are assuming the worst, just shows where your heads at and keep your negativity to yourself!
I guess the contractors forum is just a bunch of self hating community!

Just to add, I always buy my cars Cash as the old saying goes " Buy only what you can afford" so finance / lease is off the table for me.

[AQAsh]

First of all, thanks for the responses. Just to set the record straight,
1) No I am not winding the company up
2) I have a healthy bank Balance
3) I am not contracting as working on a separate Start-up and looking to close a round shortly. ( P.S) for the record not had issue with finding gig's so far thankfully.

The reason I wanted to know was simply which year does the corporation tax relief do I get as I will be beneficial.
The invoice date is in April and my end of year is end of May.

[northernladuk]

Or he's realised that if he winds up the company, the car is not automatically going to be his. It's a company asset which will have to be bought off the company at market value.

That's where my money is at.

[WTFH]

I got £5 that says this a poor assumption. If OP was sitting pretty they wouldn't be considering canceling the car.

Or he's realised that if he winds up the company, the car is not automatically going to be his. It's a company asset which will have to be bought off the company at market value.

[WTFH]

This link might help:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800



Sounds to me like this is a grey area that only an experienced accountant will be able to advise on.

Hence my question about the invoice.
I suspect the "invoice" will be just a deposit - certainly for private purchases, anything before you sign the final paperwork is just a deposit. Until the vehicle is actually built and delivered, you've not bought it. When you finally pick the car up, then you get the invoice with the actual details on it (such as VIN, etc)

I'm also wondering if there's more to the story than described.

[Lance]

I'm assuming besides the 50+k you spent on the car you've got a ton in the business bank so you are comfortable?

I got £5 that says this a poor assumption. If OP was sitting pretty they wouldn't be considering canceling the car.

[Lance]

This link might help:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11800



Sounds to me like this is a grey area that only an experienced accountant will be able to advise on.

that's what I think.
However if the OP has simply paid a deposit (partial or in full) then it gets more complex. The car doesn't become an asset until it's delivered. So what to do with the cash up front? I guess it simply becomes a debtor account with the supplier until such point as the car is delivered. If there is a gap between obligation to pay and delivery, but no asset has been received I'm not sure what to do.