Reply to: Leasing a hybrid car through a limited company

[wettowel]

In your figures, please recheck your VAT. The first section you have quoted the car costs ex VAT, then put in an additional VAT reclaim.

Sorry, maybe I should have been more clear - the figures in my calculation do not include VAT. So while the turnover is my example is £100,000, there is £20,000 in VAT as well.

Also you have included NICs for BIK in the top, but ignored them in the bottom.

I am not sure what do you mean - there is no BIK liability when leasing personally.

So, while you are doing a recalculation, please add in servicing costs and insurance costs for the electric car.

This shouldn't make much difference, as I my current car is super expensive to insure and service.

Also, if you are supposed to be trying to save money, why are you wasting it by changing your car every 2 years? If you were serious about saving money, buy a 1 year old GTE for £5k less.

How is that going to save me money?

Cheers

[WTFH]

In your figures, please recheck your VAT. The first section you have quoted the car costs ex VAT, then put in an additional VAT reclaim.
Also you have included NICs for BIK in the top, but ignored them in the bottom.

I suspect that if you sent figures like this through to your accountant, they aren’t going to tell you what you want to hear.

So, while you are doing a recalculation, please add in servicing costs and insurance costs for the electric car.

Also, if you are supposed to be trying to save money, why are you wasting it by changing your car every 2 years? If you were serious about saving money, buy a 1 year old GTE for £5k less.

[wettowel]

What is your total mileage each year, and how much of that is business mileage.

It's around 10k, none of it is business

[Hairlocks]

What is your total mileage each year, and how much of that is business mileage.

[wettowel]

The line "I have a family to support and every penny counts" implied that you might be. Whether you are are or aren't fine, you should never let the tax tail rule the dog, IMHO.

I have a different view on this, but I guess each to their own Thanks for the advice though.

[TheFaQQer]

I am not scrimping. We are perfectly fine on £45,000 per year, however freeing up additional £200 per month with no tax implications makes more sense to me than taking out even more dividends and pay even more tax on them.

The line "I have a family to support and every penny counts" implied that you might be. Whether you are are or aren't fine, you should never let the tax tail rule the dog, IMHO.

[Lance]

Did you read my post? I already have a car which I want to change for a more economical one.

Not all of it. Too long.
Fine change for more economical one. But 29MPG isn't that bad. Changing a car for better MPG is normally a false economy but as you've leased and can give it back that's not an issue.
I was challenging the view of a lease through the company especially as the BIK WILL change. In fact an all-electric will have the same BIK as a small petrol by 2020.

I have a 36 group car at the moment, GTE is 10 groups lower, at 26. I'm pretty sure the insurance will be cheaper (and also tax deductible!).

You don't have the insurance figures in your calculations. It might be cheaper (maybe) but it will be different between personal and company and different between different lease types. The few hundred quid you think you save on year 1 may well vaporise when you get insured.

[wettowel]

1) Don't let the tax tail wag the dog. If you need the money for your family, take it out and pay tax on it, rather than scrimping

I am not scrimping. We are perfectly fine on £45,000 per year, however freeing up additional £200 per month with no tax implications makes more sense to me than taking out even more dividends and pay even more tax on them.

Also, the savings in fuel shouldn't be overlooked. At least that's the whole point of this - to change to a cheaper car and save some tax.

[TheFaQQer]

2) Due to a mistake made by my accountant, I had to pay over £5k extra tax this year, which I did not foresee. As you can imagine, this has reduced the amount of dividends I can withdraw in this tax year if I want to keep in the 20% bracket and I have a family to support and every penny counts.
...
Could anyone please advise, as my accountant doesn't offer any constructive advice.

1) Don't let the tax tail wag the dog. If you need the money for your family, take it out and pay tax on it, rather than scrimping

2) Demand some kind of restitution from your accountant if their mistake has cost you money.

[wettowel]

If you want to save money, return the PCP and pick up an old banger.

It's bangernomics init.

Thanks. This I already knew.

[Antman]

I was looking at a BIK calculator and the 330e se version came in really low, like £470 @20% bracket

[Antman]

If you want to save money, return the PCP and pick up an old banger.

It's bangernomics init.

[northernladuk]

We've covered this at least 3 times very recently so there is some good reading for you. I seem to think we still never reached a conclusion though.

In Google type something like 'lease hybrid site:forums.contractoruk.com' and have a read to see if the existing threads covers some of the first bases so we don't need to go over again.

[wettowel]

What makes you think that we'll have any better advice than what your accountant said?
I agree with him but you ignored him.

My accountant caused me so much grief it's ridiculous. I don't trust anything that guy says. I am in the process of switching to someone else.

Just buy your own car and claim mileage allowance.

Did you read my post? I already have a car which I want to change for a more economical one.

and you haven't factored in insurance which costs more for a business car

I have a 36 group car at the moment, GTE is 10 groups lower, at 26. I'm pretty sure the insurance will be cheaper (and also tax deductible!).

[Lance]

When asked in the past, my accountant advised me not to lease cars through the LTD company at all, due to the high BIK rates, however he failed to point out that hybrids are very cheap.

>>>> SNIP>>>>> tl;dr

Could anyone please advise, as my accountant doesn't offer any constructive advice.

What makes you think that we'll have any better advice than what your accountant said?
I agree with him but you ignored him.

Hybrids are a better BIK at the moment. But there's a budget coming soon, and as more cars become electric, and less diesel the treasury are gonna want a slice of that cake instead.

Just buy your own car and claim mileage allowance.

EDIT: and you haven't factored in insurance which costs more for a business car