Ltd co purchasing vehicle for employee

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northernladuk replied

23 February 2011, 11:39
Clare and all the other clever numbers bods can do the sums. What about the common sense side.

If we could all gift ourself cars, houses, holidays and make a tax saving on it don't you think a) we would all be doing it, b) HMRC would have been down on this like a ton of bricks.

I would be interested to see what the numbers come out as but this sounds decidedly wrong.
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Clare@InTouch replied

23 February 2011, 08:42
Offhand my thoughts would be that the car would be a company asset, but would not qualify for 100% first year capital allowances (AIA). The rate allowable would depend on the CO2 emissions. There's a summary here:

Capital allowances on cars | Business Link

The actual allowances you'd get would depend on when you bought the car and when you gifted it to yourself, but they could likely be zero (by the time you take into account the purchase then the deemed 'sale'). If the purchase and sale cross over a year end you'd have to think of the benefit in kind implications for a company car and maybe fuel too.

You would then be taxed on the value of the benefit at 20% in lower rates or 40% in higher rates, the rate being determined by how much other income you have. The company would pay 12.8% Employers NI on the value too. Don't forget that £10,000 would also form part of your overall income, so the level at which your dividends would become higher rate would be lower.

If you're in the basic rate tax band you could take a dividend at 0% tax and buy it personally. Even in higher rates a dividend would be 22.5% which is better than personal tax at 20% plus NI at 12.8%.
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richy started a topic Ltd co purchasing vehicle for employee

22 February 2011, 23:55
Ltd co purchasing vehicle for employee

Hello all

Is there any saving if ltd co purchases next motor and gifts it to me as employee of ltd co?

I expect I would get taxed BIK for the gift, but would it work out cheaper than if I bought the motor directly using my personal bank account money?

My thought was 10k for the car would be ltd co expense.

personal tax return would be tax on the gift of 10k.

.. feels the same as if I just purchase myself directly.
cheers rich
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