Company Vehicle or Personal Car

[IR35FanClub]

Get a Honda Civic diesel, buy it yourself for about £5k and claim the milage.

I ask my accountant this question every year (becasue the usually some new energy effieicny capital purchase scheme or whatver) and the answer is still the same. The cost of buying a new car and suffeing depreciation, or expensive lease costs is more than a bit of depreciation on an older car and claiming back the mileage.

I had a Navarra and unless you like shelling out £80/wk in fuel bills (for low mileage!) youll soon hate it, plus it drives like youd expect.. no handling, but does go pretty rapid for something approaching 2 tonnes. Thing is, you still cant fit a set of wardrobes in the back. Ive got an Xtrail now, while still not that economical... about 35 instead of 23mpg thats a huge difference, and it can take 3 sets of flat packed ikea wardrobes in the fold flat boot. You could do it in the navarra if you took the snugtop off, and risk it raining on them!? Xtrail is still pants to drive an sounds like a tractor when cold, hence the soon to be awapped with a civic. The fuel savings will pat for a rent van whenever i need to shift something bigger and stop the interior getting mashed.

I did consider an 8 seat merceds vito, so in between contracts i can be a taxi driver, lol. But am hovering over the buy now button on a TT 3.2 DSG. Hmmmn.

[edit] Forgot to make the main point about a pickup... if you are buying one to avoid tax... fail. The money theyll get back off you in fuel duty and vat on the fuel duty is mee than youll save. And if you fancy one for some fun, youd be better off with an electric smart car. That can at least go round roundabout at something approaching to speed ;-).

For a totally different idea, how about a used merc sprinter. Same sort of mpg as a navarra, but can carry loads. Maybe even a smart car.

[Wanderer]

Thanks. I think I'll ditch the company car idea. Now it boils down to.....do I buy a sensible diesel golf or guzzling Navara that I don't really need!

Yeah, I think Sockpuppet is right. If you are spending £7k then it's probably not worth getting a company van. Your are probably better just claiming the mileage allowance and keep it simple. If you are spending big and buying something new then it may be worth it.

It may actually tax efficient to have a company car but only if it is a low emissions one, < about 120g/km. Some of the new Golf's are quite low emissions. You won't get a low emissions car in your price range though.

The Navara you have your eye on is classed as a van and there are some interesting quirks of having a van:

• You can use the van for business use plus "ordinary commuting" (eg, which would not normally be allowable if you are outside the 24 month rule) and there is no BIK to pay as long as your private use of the van is insignificant. This may be possible if you have some other vehicle available for private use. See guidance from HMRC.
  
• If you use the van for private use then the BIK value of £3,000 applies and if the company provides you with free fuel then an additional BIK of £550 applies which may be useful except you don't do a lot of miles.
  
• Vans are limited to 50mph on single-carriageway roads, 60mph on dual-carriageways and 70mph on motorways if you like to "make good progress" when you are driving. I have heard of this being enforced too.

So if anyone out there is caught by the 24 month rule and does a lot of commuting miles then it may be worth getting a van solely for commuting/business miles if you have another car that you can have for private use....

[Gobsheen]

On the issue HMRC denying relief for a company van for a contractor, as a accountant in practice (1) I've not known them do it and (2) I'm not sure how they could do it and the law on deductions and benefit in kind is pretty clear and has nothing in it about need / appropriateness.

On cars, you need to do the maths, but 99 out of 100 it comes down to owning it personally and calming mileage.

Thanks. I think I'll ditch the company car idea. Now it boils down to.....do I buy a sensible diesel golf or guzzling Navara that I don't really need!

[BolshieBastard]

BIK aside I don't believe HMRC will accept a pickup unless you use it to pick stuff up. Just1morethan makes the comment here...

Something to consider...

http://forums.contractoruk.com/accou...e-pick-up.html

And is what I've said in the past. HMRC closed that particular loop hole a few years ago to prevent all these businesses using pick ups, claiming back VAT when they didnt use the vehicle for it's intended purpose.

Besides that, if people buy these crew cab type pick ups, they have different speed limits on the roads so, if you arent careful you can get snapped by the cameras doing 50 on a road that may have a limit of 40 for these vehicles whereas PLG's wont.

[Jessica@WhiteFieldTax]

On the issue HMRC denying relief for a company van for a contractor, as a accountant in practice (1) I've not known them do it and (2) I'm not sure how they could do it and the law on deductions and benefit in kind is pretty clear and has nothing in it about need / appropriateness.

On cars, you need to do the maths, but 99 out of 100 it comes down to owning it personally and calming mileage.

[northernladuk]

Good point I hadn't thought of. Where's the tax man's sense of fun?!

Too many people trying to take the piss drained the fun out of him............

[Gobsheen]

Good point I hadn't thought of. Where's the tax man's sense of fun?!

[northernladuk]

BIK aside I don't believe HMRC will accept a pickup unless you use it to pick stuff up. Just1morethan makes the comment here...

Something to consider...

http://forums.contractoruk.com/accou...e-pick-up.html

[Gobsheen]

Thanks guys. Realised now that I'd misunderstood the van BIK stuff.

I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.
I must improve my searching skills.

[northernladuk]

I'm sure plenty of you have been through all this before and are familiar with the reality of it. Any guidance would be really appreciated.

Best guidance here, as already mentioned, is to brush up on your search skills. This has been ask many many times and there are some good threads explaining the detail.

Have a look at this sticky explaining how to do a google search on the forums. Check this area of the forum for the term 'company car' and all will be revealed.

http://forums.contractoruk.com/welco...uk-forums.html

[Sockpuppet]

Unless you get a VAT qualifying vehicle (i.e. one that has been owned by a business from new) then there is no VAT to reclaim on second hand.

For £5k I would buy as personal. You'll pay tax on £3000 a year for having it as a van so after ~2 years you've paid more than if you bought it outright.

Ok, saving on fuel etc but there is also tax to pay on that.

Best idea is to work out 45p per mile vs Navara. I'll suggest 45p per mile is better value.

[SimonMac]

Personal Car, if you want to know why improve your searching skills

[Gobsheen]

Hi,
Spot the Noob! I know this has been discussed a million times but I struggled to find an answer.....but that could be down to my searching skills.

I'm in my first contract and thinking about changing my car. It's a personal car, not a company car and my mileage claim is worth about £140 a week i.e. I don't do big miles. I'm thinking of either changing to another similar personal car or a company vehicle (most likely a Nissan Navara). I'm not planning to spend too much....about £5-7k.

I'm trying to work out the pro's and con's.

Personal car
- have to pay tax on the money I use to buy it
- can't claim maintenance costs etc
- can claim mileage
- no BIK

Company pick-up
- lets get it out of the way.....I've fancied getting a pick-up for years! Maybe I just need to do it, to get it out of my system!
- Can purchase pre-tax
- Can insure, maintain etc through the company....again pre-tax
- have to pay vehicle and fuek BIK.....but low as it's a commercial vehicle
- poor mpg.....but I don't do very many miles
- VAT - I'm in the flat rate scheme.....can I claim back the VAT as it's over £2k?

I'm sure plenty of you have been through all this before and are familiar with the reality of it. Any guidance would be really appreciated.