Best lease car deals available?
Discussion
PurpleMoonlight said:
I assume the business is a Ltd and you mean the business leases the vehicles but the user pays the cost.
If so, your accountant doesn't know the law.
This 'BIK avoidance' has been tested by HMRC in the Courts and the business lost.
Business is a vanilla non Ltd partnership between me and my wife. If so, your accountant doesn't know the law.
This 'BIK avoidance' has been tested by HMRC in the Courts and the business lost.
Every penny of profit that ends up in the business account is subject to income tax.
The lease payments are drawn from the business account like any other transfer of money (eg to personal accounts). For accounting purposes it is treated as personal expenditure.
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Might be different for you guys with limited Co's, but for ordinary partnerships or the self employed it is very simple.
That was my first dealing with LeasePlanGo - very very good, worthy of a special mention. The price must be a loss to them, 5 door DSG for £1600 down + 23 x £277 inclusive of tyres, tax & servicing. Score!
Admiral didn't flinch when i checked insurance with lease co. as registered keeper.
I'll now torment myself with every Golf R review between now and July...
Admiral didn't flinch when i checked insurance with lease co. as registered keeper.
I'll now torment myself with every Golf R review between now and July...
PurpleMoonlight said:
Okay, I've done some research into this employer/personal lease query.
It doesn't work because the initial lease is between the leasing company and the employer. When the employer then makes the car available for the employee for personal use a BIK tax charge is created.
The BIK can only be mitigated if the employee pays the employer a charge for the personal use element. Anything paid only reduces the value upon which the BIK is charged. So unless the employee is in effect going to pay the employer the full 20% od retail price (or whatever percentage applicable) possibly plus VAT an element of BIK will be payable to HMRC.
The employer then has treat this as a trading receipt presumably.
There is also a £5000 maximum employee contribution offset but I am not sure if that is just of the employer buys the car or to any lease contribution.
Yes, if the company expenses the lease as a business cost you are correct. It doesn't work because the initial lease is between the leasing company and the employer. When the employer then makes the car available for the employee for personal use a BIK tax charge is created.
The BIK can only be mitigated if the employee pays the employer a charge for the personal use element. Anything paid only reduces the value upon which the BIK is charged. So unless the employee is in effect going to pay the employer the full 20% od retail price (or whatever percentage applicable) possibly plus VAT an element of BIK will be payable to HMRC.
The employer then has treat this as a trading receipt presumably.
There is also a £5000 maximum employee contribution offset but I am not sure if that is just of the employer buys the car or to any lease contribution.
But
If the company takes out the lease and just puts the cost to the directors loan account then there is no BIK as I keep saying. Effectively the director is paying for the lease themselves not the company. They are just doing it through the company to get the lease that wasn't available as a personal lease.
It's not illegal yada yada yada if anything it's a breach of contract between the ltd co and the lease company.
No BIK!!
-Z- said:
Business is a vanilla non Ltd partnership between me and my wife.
Every penny of profit that ends up in the business account is subject to income tax.
The lease payments are drawn from the business account like any other transfer of money (eg to personal accounts). For accounting purposes it is treated as personal expenditure.
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Might be different for you guys with limited Co's, but for ordinary partnerships or the self employed it is very simple.
Spot on, and it's not different for ltd companies. They are confused / getting bad advice / wrong. Every penny of profit that ends up in the business account is subject to income tax.
The lease payments are drawn from the business account like any other transfer of money (eg to personal accounts). For accounting purposes it is treated as personal expenditure.
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Might be different for you guys with limited Co's, but for ordinary partnerships or the self employed it is very simple.
b0rk said:
The cheap Golf R's have a healthy amount of manufacturers discount/support, I believe VW have now pulled the support so only still valid quotes can be had at the ultra cheap prices.
I'd imagine more likely that just dealers have met their quotas and the lease cos can't be arsed to trawl the country to try and find one that hasn't. I think generally they have a set of pet dealers for each manufacturer, and the VW ones have just run out. JQ said:
-Z- said:
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Huh, the only difference between personal leases and business leases is the 20% vat. BE57 TOY said:
-Z- said:
Business is a vanilla non Ltd partnership between me and my wife.
Every penny of profit that ends up in the business account is subject to income tax.
The lease payments are drawn from the business account like any other transfer of money (eg to personal accounts). For accounting purposes it is treated as personal expenditure.
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Might be different for you guys with limited Co's, but for ordinary partnerships or the self employed it is very simple.
Spot on, and it's not different for ltd companies. They are confused / getting bad advice / wrong. Every penny of profit that ends up in the business account is subject to income tax.
The lease payments are drawn from the business account like any other transfer of money (eg to personal accounts). For accounting purposes it is treated as personal expenditure.
You have to remember that a business lease is only a name. It is a qualifier to discount the general public. Anyone self employed qualifies for these leases.
Might be different for you guys with limited Co's, but for ordinary partnerships or the self employed it is very simple.
BE57 TOY said:
PurpleMoonlight said:
Okay, I've done some research into this employer/personal lease query.
It doesn't work because the initial lease is between the leasing company and the employer. When the employer then makes the car available for the employee for personal use a BIK tax charge is created.
The BIK can only be mitigated if the employee pays the employer a charge for the personal use element. Anything paid only reduces the value upon which the BIK is charged. So unless the employee is in effect going to pay the employer the full 20% od retail price (or whatever percentage applicable) possibly plus VAT an element of BIK will be payable to HMRC.
The employer then has treat this as a trading receipt presumably.
There is also a £5000 maximum employee contribution offset but I am not sure if that is just of the employer buys the car or to any lease contribution.
Yes, if the company expenses the lease as a business cost you are correct. It doesn't work because the initial lease is between the leasing company and the employer. When the employer then makes the car available for the employee for personal use a BIK tax charge is created.
The BIK can only be mitigated if the employee pays the employer a charge for the personal use element. Anything paid only reduces the value upon which the BIK is charged. So unless the employee is in effect going to pay the employer the full 20% od retail price (or whatever percentage applicable) possibly plus VAT an element of BIK will be payable to HMRC.
The employer then has treat this as a trading receipt presumably.
There is also a £5000 maximum employee contribution offset but I am not sure if that is just of the employer buys the car or to any lease contribution.
But
If the company takes out the lease and just puts the cost to the directors loan account then there is no BIK as I keep saying. Effectively the director is paying for the lease themselves not the company. They are just doing it through the company to get the lease that wasn't available as a personal lease.
It's not illegal yada yada yada if anything it's a breach of contract between the ltd co and the lease company.
No BIK!!
HMRC address this unambiguously here: http://www.hmrc.gov.uk/manuals/eimanual/eim23215.h...
HMRC said:
In some cases, the employee pays all the costs incurred by the employer, an arrangement which it is claimed prevents car benefit applying. This is not true: the car benefit conditions are all met in this case and car benefit applies, as the 2009 First-tier Tribunal cases of Whitby and Ball v HMRC (TC00255) and Stanford Management Services Ltd and others v HMRC (TC00409) demonstrate.
Payments by the employee can only be taken into account as either:
capital contributions (Step 3 of the calculation, see EIM24350)
payments for private use (Step 8 of the calculation, see EIM25250)
I don't see how apportioning the lease cost to the DLA changes anything in respect of the above - arguing that its private expenditure on behalf of the director when there's evidence of the lease agreement formed with the limited company, and payments are coming out of a company bank account, is surely just attempting to pull the wool over HMRC's eyes?Payments by the employee can only be taken into account as either:
capital contributions (Step 3 of the calculation, see EIM24350)
payments for private use (Step 8 of the calculation, see EIM25250)
The Stanford Management case is very relevant although they did make a few fundamental mistakes like claiming 50% of the VAT and also failing to charge a few of the fixed admin charges on the lease.
In any case this goes to show that it wouldn't take much to slip up and find yourself with a massive BIK bill. Personally I wouldn't take any such risks having *any* connection between a car lease agreement and my company - I'd rather lease personally and pay myself tax-free mileage payments at the approved rates.
There is a big difference. If the company sees the lease charge in its accounts and then the director reimburses the company then, as above, there is BIK.
If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
BE57 TOY said:
There is a big difference. If the company sees the lease charge in its accounts and then the director reimburses the company then, as above, there is BIK.
If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
You are wrong.If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
The BIK arises because the lease is in the company name and they make the car available to the employee for personal use. HMRC ignore what you claim is a lease between the company and the employee, and they have won tribunals on that.
PurpleMoonlight said:
You are wrong.
The BIK arises because the lease is in the company name and they make the car available to the employee for personal use. HMRC ignore what you claim is a lease between the company and the employee, and they have won tribunals on that.
The BIK arises because the lease is in the company name and they make the car available to the employee for personal use. HMRC ignore what you claim is a lease between the company and the employee, and they have won tribunals on that.
I disagree.
BIK arises because there is a benefit to an employee ie a car for personal use NOT because a lease agreement has been signed.
BE57 TOY said:
There is a big difference. If the company sees the lease charge in its accounts and then the director reimburses the company then, as above, there is BIK.
If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
I wonder if there's any necessity for it to even be paid from a company bank account? In other words the lease would in the company's name, literally in name only.If the company doesn't declare this expense and the director repays the company, the two net off and there is no BIK.
All that's happening in essense is the director using the company bank account. Completely above board, cut and dry, no BIK!
The dodgy part would then be the company having an unrecorded liability for the lease but some lease companies want personal guarantees anyway.
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