I8 ltd company purchase
Discussion
Been looking to buy a nice car for myself for a while and ive started to look at the i8. Not only for its looks and daily drive useability but for financial reasons.
So i have a vat registered development company and will be showing profits in the next yr returns.
If i was to buy a vat qualifying i8 ( seen some posted for 85k on auto trader) . Would i be able to reclaim 20% vat of the 85k (assume its 100% business use). Tht gets the car to 68k. Then assuming it can be offset against corporation tax, i can get another 13k off ? Makng the car an actual cost of 55k?
Yes i know whn i sell it , i would have to pay bck vat on sale of car and any CTax from sale of car.
The benefit in kind also sounds minimal.
Has anyone triedthe above and confirm tax treatment? Would be great if the tax man was paying Almost half the cost of running this car.
Thanks
So i have a vat registered development company and will be showing profits in the next yr returns.
If i was to buy a vat qualifying i8 ( seen some posted for 85k on auto trader) . Would i be able to reclaim 20% vat of the 85k (assume its 100% business use). Tht gets the car to 68k. Then assuming it can be offset against corporation tax, i can get another 13k off ? Makng the car an actual cost of 55k?
Yes i know whn i sell it , i would have to pay bck vat on sale of car and any CTax from sale of car.
The benefit in kind also sounds minimal.
Has anyone triedthe above and confirm tax treatment? Would be great if the tax man was paying Almost half the cost of running this car.
Thanks
On VAT, you cannot reclaim that as the car is presumably not for 100% business usage - and that means 100%! They take that seriously.
As for the BIK tax, I looked on a calculator, based on the presumption that you are a 45% tax payer, so quite good.
Car Benefit Percentage
5 %
Cash Equivalent Value
£5,224
Annual Tax at 45 %
£2,351
Monthly Tax at 45 %
£196
As for the BIK tax, I looked on a calculator, based on the presumption that you are a 45% tax payer, so quite good.
Car Benefit Percentage
5 %
Cash Equivalent Value
£5,224
Annual Tax at 45 %
£2,351
Monthly Tax at 45 %
£196
Your maths is a bit off too, removing the VAT of £85,000 gets you to approximately £70,800. You need to reduce by 16.7% to get a nett figure if you have a gross one.
Anyway, HMRC have seen all this before. Your record keeping has to be impeccable if you are going to try and reclaim the vat. You can't count commuting.
Anyway, HMRC have seen all this before. Your record keeping has to be impeccable if you are going to try and reclaim the vat. You can't count commuting.
Remember you have to buy new, not second hand to get incentives,
You can then get 100% write off against tax in first year. VAT is, in summary, a no go.
BIK rates are good but go up to 9% in 17/18. (That assumes you have some personal usage, so BIK applies, but is hassle free, To avoid BIK, would have to very work hard to convince them it's absolute 100% business use, and if genuine, would be so restrictive it's not worth having)
You can then get 100% write off against tax in first year. VAT is, in summary, a no go.
BIK rates are good but go up to 9% in 17/18. (That assumes you have some personal usage, so BIK applies, but is hassle free, To avoid BIK, would have to very work hard to convince them it's absolute 100% business use, and if genuine, would be so restrictive it's not worth having)
Edited by footsoldier on Sunday 11th October 22:07
Edited by footsoldier on Sunday 11th October 22:08
copied from the other thread ..... not sure if relevant.
TISPKJ said:
Here you go this is the one I was thinking of ...... Apologies if no good
http://www.pistonheads.com/gassing/topic.asp?t=142...
http://www.pistonheads.com/gassing/topic.asp?t=142...
My argument is that I need a nice car when I'm going to look at potential plots/development opportunities. Without this the agents just don't take you serious.
The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
Gh76 said:
My argument is that I need a nice car when I'm going to look at potential plots/development opportunities. Without this the agents just don't take you serious.
The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
There was a case law with a guy with Lambo a few years back when HMRC chased them. His argument was that an estate agent (IIRC) needed to look the part. He even parked it in a rented lock up at work, not his home to demonstrate only business use.The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
TBH this is an idea that sounds great in practice but one an accountant would hold his head in his hands when you ran it by him.
There's no issue with putting it through your company as long as it has a qualifying trade.
I can't remember exactly why VAT reclaim is an issue, but have just asked accountant to remind me!
Remember it has to be new to qualify for enhanced capital allowances, with 100% first year write off, or if not that much profit, then residual goes into pot for 18% use on a reducing balance basis going forward.. Then, as long as any sales price is not more than the residual allowances in pot when you sell, there will be a set off but no tax to pay on the way out.
On BIK - is it worth the hassle? 85k@5%x45% is c£1900 and you can use it when you like. Still a good deal!
Don't forget you can put through insurance, servicing etc as a company cost, and even HP interest is tax deductible if you have better use for cash in the business.
I can't remember exactly why VAT reclaim is an issue, but have just asked accountant to remind me!
Remember it has to be new to qualify for enhanced capital allowances, with 100% first year write off, or if not that much profit, then residual goes into pot for 18% use on a reducing balance basis going forward.. Then, as long as any sales price is not more than the residual allowances in pot when you sell, there will be a set off but no tax to pay on the way out.
On BIK - is it worth the hassle? 85k@5%x45% is c£1900 and you can use it when you like. Still a good deal!
Don't forget you can put through insurance, servicing etc as a company cost, and even HP interest is tax deductible if you have better use for cash in the business.
Edited by footsoldier on Monday 12th October 23:33
If you want one then the finances make it an even sweeter deal.
However it's still a 100k car, so no matter how low it's taxed, it's a long way off free money and so you need to make sure it is a car you actually want, or else you may as well just buy something used that you prefer for £60k.
However it's still a 100k car, so no matter how low it's taxed, it's a long way off free money and so you need to make sure it is a car you actually want, or else you may as well just buy something used that you prefer for £60k.
I'm looking at the exact same thing but also considering a Tesla. We haven't bothered putting cars through the business before so I'm getting my head round the details and financials. Am I correct in thinking:
1: 100% of the purchase price can be set against tax in the year of purchase?
2: realistically there's no way to claim the vat back and use the car as one would want to, i.e. for fun.
3: there's 5% BIK payable on the I8 and Tesla and this 5% is paid annually based on the retail price of the vehicle when new and then your higher tax rate percentage of the 5%.
4: 5% is only until 2016, the rate goes up to 9% from 2017 onwards?
5: does anyone know if the Tesla also goes up to 9% from 2017?
6: what's this about the company owning the car for 2 years and one day then you can purchase the car personally for a nominal fee?
Thanks
1: 100% of the purchase price can be set against tax in the year of purchase?
2: realistically there's no way to claim the vat back and use the car as one would want to, i.e. for fun.
3: there's 5% BIK payable on the I8 and Tesla and this 5% is paid annually based on the retail price of the vehicle when new and then your higher tax rate percentage of the 5%.
4: 5% is only until 2016, the rate goes up to 9% from 2017 onwards?
5: does anyone know if the Tesla also goes up to 9% from 2017?
6: what's this about the company owning the car for 2 years and one day then you can purchase the car personally for a nominal fee?
Thanks
BIK goes up every tax year.
2015/16 5%
2016/17 7%
2017/18 9%
2018/19 13%
So you've only got a few more months of 5% left, and by april 2018 you'll be paying 13% on a 2.5 year old car.
Those are the rates for any car with 0-50 CO2's. The rates for the next band 51-75 is much higher. Also, if the Gov gets all green, they can change those rates if they want.
2015/16 5%
2016/17 7%
2017/18 9%
2018/19 13%
So you've only got a few more months of 5% left, and by april 2018 you'll be paying 13% on a 2.5 year old car.
Those are the rates for any car with 0-50 CO2's. The rates for the next band 51-75 is much higher. Also, if the Gov gets all green, they can change those rates if they want.
JustinP1 said:
Gh76 said:
My argument is that I need a nice car when I'm going to look at potential plots/development opportunities. Without this the agents just don't take you serious.
The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
There was a case law with a guy with Lambo a few years back when HMRC chased them. His argument was that an estate agent (IIRC) needed to look the part. He even parked it in a rented lock up at work, not his home to demonstrate only business use.The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
TBH this is an idea that sounds great in practice but one an accountant would hold his head in his hands when you ran it by him.
We had a genuine pool car - kept at the premises, never goes home, never used for personal, so was legit. Convincing them was difficult.
kryten22uk said:
BIK goes up every tax year.
2015/16 5%
2016/17 7%
2017/18 9%
2018/19 13%
So you've only got a few more months of 5% left, and by april 2018 you'll be paying 13% on a 2.5 year old car.
Those are the rates for any car with 0-50 CO2's. The rates for the next band 51-75 is much higher. Also, if the Gov gets all green, they can change those rates if they want.
Ok, thanks. More to consider. Went to see an I8 today. Nice enough car. Real test was to see if we could get our kids in the back,. I think we can, just waiting for BMW to arrange an extended test drive so I can get them in there and take them for a decent drive, see how they cope. Failing that its back to considering a Tesla, a much more exciting proposition in many ways but a much duller car to look at.2015/16 5%
2016/17 7%
2017/18 9%
2018/19 13%
So you've only got a few more months of 5% left, and by april 2018 you'll be paying 13% on a 2.5 year old car.
Those are the rates for any car with 0-50 CO2's. The rates for the next band 51-75 is much higher. Also, if the Gov gets all green, they can change those rates if they want.
Gh76 said:
My argument is that I need a nice car when I'm going to look at potential plots/development opportunities. Without this the agents just don't take you serious.
The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
Your argument is unfortunately invalid, As I am sure the pistonheads classic of the guy who owns half of the south east rocking up in a battered Volvo estate stinking of wet Labrador.The ltd company is registered at home so think that should cancel out the commuting to and from work?
I have a run around car so can argue tht the i8 is only for business use.
Far fetched? What you think?
Someone must have run the i8 through their ltd company by now?
It can work for capital allowance planning but pay the BIK and save yourself a worry, Lord knows why you think you can claim the VAT (purple Lambo story aside) so no big rebate for you on purchase sorry.
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