Selling personal car to limited company - what "price" to sell at?

[Wanderer]

Every accountant has said that company cars are more expensive by virtue of the BIKs they attract.

Actually, if you but a really low emissions car then you could actually pay less tax than if you drew the money out of the company and paid for it personally. I don't think most of the accountants here can be bothered with all the extra admin so from their point of view it's not worth it, of course (more work for them for the same fee).

I can't see how someone could buy a car on personal credit and then sell it to their company while they still owe money on it though.

And you end up with a Pious. Are you sure you're doing the right thing...

I can't disagree with you on that one though!!! Hate those stupid cars, worse than Nissan Mirca's with drivers so stupid they need parking sensors.

[Jessica@WhiteFieldTax]

Our general view is also to generally avoid having a company car.

Alan

Likewise my view as well - when the maths is done its invariably a tax cost, and the paperwork/ reporting is a nuisance.

[BolshieBastard]

Company cars for contractors don't work because you have a cost implication to your do plus, you have bike / tax issue to you personally, ie you pay twice.

[Nixon Williams]

Bear in mind that if you buy the car any VAT you could have possibly reclaimed (not that you can on new cars, but there are exceptions) wouldn't be allowed if you bought then sold to your company.

There are very few circumstances in which VAT can be reclaimed on a car, and it would be unusual for VAT to be charged on a used car.

As usual there are exceptions, but for most contractors, I cannot think of a realistic example of when VAT could be reclaimed.

Our general view is also to generally avoid having a company car.

Alan

[eek]

Selling personal car to limited company - what "price" to sell at?

You problem is what looks like tax fraud and smells like tax fraud may lead to hmrc having a VERY close look at your affairs.

[malvolio]

Thanks for the initial responses everyone... you're right about all the downsides, but there's a couple of scenarios it could work out better if legally doable:

1) My current car is crap, and realstically I think I'd be lucky to sell it for £1000. However some deals are offering massive minimum swappage deals (say, £5k min).

So, the way I see it, if I bourhgt a new car for, say £20k, got a £5k swappage allowance (buying it personally for £15), I could sell it to my company for £20k (the market price...).

I save on the company tax (and any additional personal tax I'd pay on dividending out the £20k to myself), and get an extra £4k for my car than I otherwise would be able to manage.

Not the only inputs into this decision mind you, but it could be the make or break.


Long shot, I'd wonder whether I could do this with, say, the Prius Plug-In which gets discounted by £5k due to a government grant - buy for say £27k after the £5k grant - which is paid to the dealership, and dealserhip passes on as a saving, sell it to my company for £32k (the market price, on which the BIK - at only 5% - gets calculated on).

I suspect the latter is less likely to work though.

I think you're wrong on several levels. Every accountant has said that company cars are more expensive by virtue of the BIKs they attract. More to the point, you can't sell a £1000 car to yourself for £5000, anyway (well you can; but Hector would not appreciate you doing so). And I'm not sure you trying to capitalise discounts is going to work either.

Finally you have to work it over the three year life of the car. There's a lot more costs and taxes involved than simply buying it.

And you end up with a Pious. Are you sure you're doing the right thing...

[northernladuk]

You are looking at this from the wrong angle. You should be looking at the tax implications to you first before deciding on anything else.

You have to pay BIK on the value of the car when new and on it's emissions. Unless it is a under 110mg/cc or whatever then it just isn't worth doing.

Get an accountant to do your sums and you will find you are on a hiding to no where here.

Lots of threads about this all end up the same..

company car site:http://forums.contractoruk.com/accounting-legal - Google Search

[lifexplorer]

Benefits

Call your accountant and ask them.

Personally a company car is too much like hard work and I don't know (m)any contractors who find it tax efficient.

Thanks for the initial responses everyone... you're right about all the downsides, but there's a couple of scenarios it could work out better if legally doable:

1) My current car is crap, and realstically I think I'd be lucky to sell it for £1000. However some deals are offering massive minimum swappage deals (say, £5k min).

So, the way I see it, if I bourhgt a new car for, say £20k, got a £5k swappage allowance (buying it personally for £15), I could sell it to my company for £20k (the market price...).

I save on the company tax (and any additional personal tax I'd pay on dividending out the £20k to myself), and get an extra £4k for my car than I otherwise would be able to manage.

Not the only inputs into this decision mind you, but it could be the make or break.


Long shot, I'd wonder whether I could do this with, say, the Prius Plug-In which gets discounted by £5k due to a government grant - buy for say £27k after the £5k grant - which is paid to the dealership, and dealserhip passes on as a saving, sell it to my company for £32k (the market price, on which the BIK - at only 5% - gets calculated on).

I suspect the latter is less likely to work though.

[Nathan SJD Accountancy]

Personally, I would look at 'Webuyanycar' and whatever they quote you on the websaite, set that as the bare minimum. .

Look at Autotrader for other cars matching your spec, condition etc.

I think that is probably the quickest to save you making a trip to a dealer.

[eek]

Call your accountant and ask them.

Personally a company car is too much like hard work and I don't know (m)any contractors who find it tax efficient.

[Sockpuppet]

Bear in mind that if you buy the car any VAT you could have possibly reclaimed (not that you can on new cars, but there are exceptions) wouldn't be allowed if you bought then sold to your company.

[Nathan SJD Accountancy]

You could simply go and get a quote from a dealer. I would go through the process of working out a price of the car if you were going to sell it, but document how you did it so you can justify it to the taxman if there was an audit, i.e. look on websites at the prices of similar cars, print them out and put them in your company records.

WBBS.

Have to also add, have you considered the tax implications of your company providing you with a motor vehicle?

[BlasterBates]

You could simply go and get a quote from a dealer. I would go through the process of working out a price of the car if you were going to sell it, but document how you did it so you can justify it to the taxman if there was an audit, i.e. look on websites at the prices of similar cars, print them out and put them in your company records.

[lifexplorer]

Hello,

Another question - giving some thought to potentially buying a company car however I do have a personal car to trade in. If I went down the company car route was planning on purchasing car personally, maybe also making use of my personal credit rating for finance which is far better established than my company's, but reselling to my company.

However, would any trade in value I got from old car need to factor into the price I could sell the new car for to my company? (I'm assuming it wouldn't be reasonably to just sell the new car at original market value to my limited company if higher than my personal "purchase price")?

For example, if I bought a new car price listed at £20k, and got a £5k trade in for my old car would it be reasonable to sell the new car to my company for £20k (market value/purchase price without trade in) or would I have to sell for £15k (£20k less swappage on my old car).

Don't know whether trade in deals/minimum swappage, reduce the purchase price of the new car, and would therefore need to be passed for selling to my company (in the same as ways as, say, haggling would), or whether the trade in is just money from sale for an old car that's separate to purchasing the new car, i.e. just sale proceeds on the old car that, for convenience, go towards payment of the new car.

I guess this comes down to whether the dealership gives you extra money for your old car if you buy a new one from them... or if they discount the new car in exchange for giving them your old one.

Cheers!