Car finance through company advice please
Discussion
Hi all
I have recently setup my own consultancy company and am looking to lease a new car through it. However I am a bit in the dark as to exactly how much I will save. Am I right in thinking that any car leased via a company can have the lease payments tax deducted ( looking at a range rover evoque so about £400 a month it seems) ? But then this saving is lost through me paying BIK? If so will there be any discernible saving?
Also how will this work for something more exotic? Say a 2 year old audi R8 spyder? Same rules but more or less saving compared to the evoque?
Any help will be much appreciated.
Ps currently drive an e92 M3 and looking to replace it with 2 cars, ideally the above
Thanks guys
I have recently setup my own consultancy company and am looking to lease a new car through it. However I am a bit in the dark as to exactly how much I will save. Am I right in thinking that any car leased via a company can have the lease payments tax deducted ( looking at a range rover evoque so about £400 a month it seems) ? But then this saving is lost through me paying BIK? If so will there be any discernible saving?
Also how will this work for something more exotic? Say a 2 year old audi R8 spyder? Same rules but more or less saving compared to the evoque?
Any help will be much appreciated.
Ps currently drive an e92 M3 and looking to replace it with 2 cars, ideally the above
Thanks guys
ju6121 said:
Hi all
I have recently setup my own consultancy company and am looking to lease a new car through it. However I am a bit in the dark as to exactly how much I will save. Am I right in thinking that any car leased via a company can have the lease payments tax deducted ( looking at a range rover evoque so about £400 a month it seems) ? But then this saving is lost through me paying BIK? If so will there be any discernible saving?
Also how will this work for something more exotic? Say a 2 year old audi R8 spyder? Same rules but more or less saving compared to the evoque?
Any help will be much appreciated.
Ps currently drive an e92 M3 and looking to replace it with 2 cars, ideally the above
Thanks guys
As a company director it makes almost always no sense to do a company lease as you will be raped on BIK. I have recently setup my own consultancy company and am looking to lease a new car through it. However I am a bit in the dark as to exactly how much I will save. Am I right in thinking that any car leased via a company can have the lease payments tax deducted ( looking at a range rover evoque so about £400 a month it seems) ? But then this saving is lost through me paying BIK? If so will there be any discernible saving?
Also how will this work for something more exotic? Say a 2 year old audi R8 spyder? Same rules but more or less saving compared to the evoque?
Any help will be much appreciated.
Ps currently drive an e92 M3 and looking to replace it with 2 cars, ideally the above
Thanks guys
As has been mentioned above, do NOT embark on this plan UNTIL you have properly taken into account the personal Income Tax implications of a company car.
The provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
The provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Eric Mc said:
As has been mentioned above, do NOT embark on this plan UNTIL you have properly taken into account the personal Income Tax implications of a company car.
The provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Will do, just wanted to get some benchmark ideas firstThe provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Eric Mc said:
As has been mentioned above, do NOT embark on this plan UNTIL you have properly taken into account the personal Income Tax implications of a company car.
The provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Will do, just wanted to get some benchmark ideas firstThe provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Just for info, saw this for an Evoque on a lease deal at £279pm, but only 8000 miles pa
http://www.autocar.co.uk/car-news/deals/best-car-d...
The Range Rover Evoque is a stylish SUV which sits alongside rivals including the BMW X3 and Audi Q5. Premium offerings usually carry a premium price, but we spotted a 2.2-litre eD4 Pure model going for £279 per month on Yes Lease. That's on a two-year contract, with a deposit of £2516 and an annual mileage limit of 8000.
http://www.autocar.co.uk/car-news/deals/best-car-d...
The Range Rover Evoque is a stylish SUV which sits alongside rivals including the BMW X3 and Audi Q5. Premium offerings usually carry a premium price, but we spotted a 2.2-litre eD4 Pure model going for £279 per month on Yes Lease. That's on a two-year contract, with a deposit of £2516 and an annual mileage limit of 8000.
ju6121 said:
Eric Mc said:
As has been mentioned above, do NOT embark on this plan UNTIL you have properly taken into account the personal Income Tax implications of a company car.
The provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Will do, just wanted to get some benchmark ideas firstThe provision of a car by an employer to a director or employee will trigger a taxable Benefit in Kind as well as a Class 1A National Insurance Charge on the company.
You need to factor in these costs before coming to any final decision.
Talk through the permutations with your accountant.
Ignoring the economics of the finance deal and/or the vehicle itself, the factors that other factors that need to be considered are -
The personal BIK impact
The company BIK impact
The capital allowances available (if any)
The tax relief available on vehicle running costs
The VAT impact of vehicle running costs
The different accounting treatments - depending on whether bought outright/financed by bank, HP or lease
Whether the company will pay for the fuel - and the BIK effect of that
Whether the vehicle can be classed as a "Commercial Vehicle" rather than a "Car" - which affects many of the considerations listed above
OtherBusiness said:
Just for info, saw this for an Evoque on a lease deal at £279pm, but only 8000 miles pa
http://www.autocar.co.uk/car-news/deals/best-car-d...
The Range Rover Evoque is a stylish SUV which sits alongside rivals including the BMW X3 and Audi Q5. Premium offerings usually carry a premium price, but we spotted a 2.2-litre eD4 Pure model going for £279 per month on Yes Lease. That's on a two-year contract, with a deposit of £2516 and an annual mileage limit of 8000.
It says 5000 miles when I looked?http://www.autocar.co.uk/car-news/deals/best-car-d...
The Range Rover Evoque is a stylish SUV which sits alongside rivals including the BMW X3 and Audi Q5. Premium offerings usually carry a premium price, but we spotted a 2.2-litre eD4 Pure model going for £279 per month on Yes Lease. That's on a two-year contract, with a deposit of £2516 and an annual mileage limit of 8000.
ETA aha, options! 5000 on business lease, 8000 on personal.
Edited by Oakey on Tuesday 22 July 15:59
PurpleMoonlight said:
I own a Ltd and I simply cannot see how it is ' tax efficient' to have a company car.
It is much better to purchase/lease a car personally and then claim the mileage allowance from the Ltd.
It shouldn't be hard to document 12,000 miles a year , giving you £5000 pa tax free.
I agree.It is much better to purchase/lease a car personally and then claim the mileage allowance from the Ltd.
It shouldn't be hard to document 12,000 miles a year , giving you £5000 pa tax free.
Basically OP, using the company to fund your car only really works with something cheap, new, and fuel-efficient.
For almost anything fun (e.g. the R8) it makes much more sense to buy personally. Remember you can borrow money from your company to help pay for it / deposit if that helps.
So does car related benefit in kind operate independent of how much you charge yourself as a lease/hire or can you charge yourself so much it removes the benefit in kind?
Presumably there are HMRC regs which prevent a company buying the car, reclaiming the VAT, selling it to a director and coming out ahead?
and finally, is there a minimum interest rate the company needs to charge on a director loan to prevent it being a benefit? and finally finally, does all this raise your profile with HMRC and earn you a tax audit?
Presumably there are HMRC regs which prevent a company buying the car, reclaiming the VAT, selling it to a director and coming out ahead?
and finally, is there a minimum interest rate the company needs to charge on a director loan to prevent it being a benefit? and finally finally, does all this raise your profile with HMRC and earn you a tax audit?
IanHg said:
So does car related benefit in kind operate independent of how much you charge yourself as a lease/hire or can you charge yourself so much it removes the benefit in kind?
Presumably there are HMRC regs which prevent a company buying the car, reclaiming the VAT, selling it to a director and coming out ahead?
and finally, is there a minimum interest rate the company needs to charge on a director loan to prevent it being a benefit? and finally finally, does all this raise your profile with HMRC and earn you a tax audit?
The BIK is based on percentage of the vehicle list price. The percenage used is based on the CO2 emmission rating of the car.Presumably there are HMRC regs which prevent a company buying the car, reclaiming the VAT, selling it to a director and coming out ahead?
and finally, is there a minimum interest rate the company needs to charge on a director loan to prevent it being a benefit? and finally finally, does all this raise your profile with HMRC and earn you a tax audit?
Yes there are HMRC regs preventing VAT frauds.
Yes, there are complex Income Tax and Corporation Tax rules regarding directors borrowing from their own company. There are also Companies Act disclosure requirements.
And finally, yes, messing around with cars in your company to try and give yourself an advantage can result in HMRC taking an interest in what you are up to.
As you can see from the questions and answers earlier in this thread, cars, companies, Corporation Tax, PAYE, VAT and general accounting regulations covering the treatment of vehicles are complex and could lead to all sorts of problems for a director and/or his company if he does not get the right advice.
Talk to your accountant.
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