Used BMW i3 - 100% Write Off Against Tax?
Discussion
Hello gents,
After much deliberation about company cars and EVs - i've decided on an i3.
There are some good value used cars (non rex) for about 18k.
I understand that if purchased outright via Ltd Company - the full amount can be written off against profits / tax - my question is - does this apply to a used car also or only a new one?
Can i also maintain / insure the car using company funds?
Cheers!
After much deliberation about company cars and EVs - i've decided on an i3.
There are some good value used cars (non rex) for about 18k.
I understand that if purchased outright via Ltd Company - the full amount can be written off against profits / tax - my question is - does this apply to a used car also or only a new one?
Can i also maintain / insure the car using company funds?
Cheers!
New only I'm afraid
You could pay for the costs of insurance etc as a company cost, assuming that you were happy to pay the personal BIK tax for running a company car.
I haven't done the figures, but I would expect it would only make sense if you were buying it new and taking advantage of the 100% write off.
You could pay for the costs of insurance etc as a company cost, assuming that you were happy to pay the personal BIK tax for running a company car.
I haven't done the figures, but I would expect it would only make sense if you were buying it new and taking advantage of the 100% write off.
Edited by EddieSteadyGo on Tuesday 15th September 19:09
EddieSteadyGo said:
New only I'm afraid
You could pay for the costs of insurance etc as a company cost, assuming that you were happy to pay the personal BIK tax for running a company car.
I haven't done the figures, but I would expect it would only make sense if you were buying it new and taking advantage of the 100% write off.
Thanks for the reply - i was hoping this wasn't the case!You could pay for the costs of insurance etc as a company cost, assuming that you were happy to pay the personal BIK tax for running a company car.
I haven't done the figures, but I would expect it would only make sense if you were buying it new and taking advantage of the 100% write off.
Edited by EddieSteadyGo on Tuesday 15th September 19:09
Oh well - will either have to buy a low spec new one or buy a used one personally...
Thanks for clarifying this
To be honest, I have a soft spot for electric cars, including the i3.
I couldn't bring myself to spend the money on a new one as a company purchase, despite the tax benefits, mainly because the predicted 3 year residuals are surprisingly low.
In the end I decided to take a 2 year PCP on a Nissan Leaf Tekna for a city car, and it is excellent, if you can live with the looks.
May be worth considering as it will be a lot less expensive over 2 years.
Cheers, Ed.
I couldn't bring myself to spend the money on a new one as a company purchase, despite the tax benefits, mainly because the predicted 3 year residuals are surprisingly low.
In the end I decided to take a 2 year PCP on a Nissan Leaf Tekna for a city car, and it is excellent, if you can live with the looks.
May be worth considering as it will be a lot less expensive over 2 years.
Cheers, Ed.
EddieSteadyGo said:
To be honest, I have a soft spot for electric cars, including the i3.
I couldn't bring myself to spend the money on a new one as a company purchase, despite the tax benefits, mainly because the predicted 3 year residuals are surprisingly low.
In the end I decided to take a 2 year PCP on a Nissan Leaf Tekna for a city car, and it is excellent, if you can live with the looks.
May be worth considering as it will be a lot less expensive over 2 years.
Cheers, Ed.
Agreed, the used one was justifiable, but a new one with no options is still 25k and i know it will be 10-15k or less in a few short years - negates the tax benefits. I couldn't bring myself to spend the money on a new one as a company purchase, despite the tax benefits, mainly because the predicted 3 year residuals are surprisingly low.
In the end I decided to take a 2 year PCP on a Nissan Leaf Tekna for a city car, and it is excellent, if you can live with the looks.
May be worth considering as it will be a lot less expensive over 2 years.
Cheers, Ed.
However after a couple of test drives i really really like the i3 - driving position is great, love the way you can drive it on one pedal with the regen and also the acceleration and torque is addictive, cabin is lovely also.
If i could be patient, i would wait a few years for all the lease cars to come in (and perhaps when longer battery range cars are released), these will be a steal as a used car in a few years time. Would pay for themselves in fuel savings alone when the initial price has come down a bit.
The leaf is a good shout and makes a lot more financial sense - i have also tested one, nice relaxing drive but the looks and feeling of specialness are not quite there after the i3.
I'm committed to moving to an EV either way
(Might have to look into those leaf deals - pm me if you managed to get a good deal on yours)
I do hope Eric Mc will be along in a moment to confirm this - but I am not aware of any reason why a second hand electric car should not have a 100% write down against corporation tax (though of course there will be BIK tax).
The only thing I can think of along these lines is someone buying a company van and claiming all the VAT back - if you bought a second hand van from someone who wasn't VAT-registered you wouldn't be able to claim the VAT back
The only thing I can think of along these lines is someone buying a company van and claiming all the VAT back - if you bought a second hand van from someone who wasn't VAT-registered you wouldn't be able to claim the VAT back
oop north said:
I do hope Eric Mc will be along in a moment to confirm this - but I am not aware of any reason why a second hand electric car should not have a 100% write down against corporation tax (though of course there will be BIK tax).
The only thing I can think of along these lines is someone buying a company van and claiming all the VAT back - if you bought a second hand van from someone who wasn't VAT-registered you wouldn't be able to claim the VAT back
Cheers for this - certainly hope so. Car i'm looking at has only done 2000 miles so would be a shame if it is not possible.The only thing I can think of along these lines is someone buying a company van and claiming all the VAT back - if you bought a second hand van from someone who wasn't VAT-registered you wouldn't be able to claim the VAT back
I've emailed my accountant but not heard back from him yet. From what i have found online, i cannot seem to confirm from the wording whether this applies to new only or if used is allowed.
- Fingers crossed *
oop north said:
I am not aware of any reason why a second hand electric car should not have a 100% write down against corporation tax
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdfPage 8, Table 3. Makes it clear only applies to new cars.
EddieSteadyGo said:
https://www.gov.uk/government/uploads/system/uploa...
Page 8, Table 3. Makes it clear only applies to new cars.
Nooooooooo!! Page 8, Table 3. Makes it clear only applies to new cars.
Thanks for the link, not sure what to do now...
EddieSteadyGo said:
If you can afford to lose around £4-5k per year in depreciation, I would buy the second hand version personally rather than a new one via the company 
I think they are great cars!
I almost wish i had not tried the i3 I think they are great cars!
My man maths is telling me that the depreciation will be offset by 2k fuel savings per year.
However that depreciation is going to be heavy whichever way you slice it!
The 100% allowance through a limited company is only bringing the tax relief forward. When the company sells it the proceeds will increase the taxable profit. If you can only claim a percentage capital allowance like other cars and then sell for more or less than the written down value in the future your taxable profits will be adjusted in that year. I am not an accountant but this is my understanding. I would buy the used i3, it will probably be very low BIK anyway.
grahamm said:
The 100% allowance through a limited company is only bringing the tax relief forward. When the company sells it the proceeds will increase the taxable profit. If you can only claim a percentage capital allowance like other cars and then sell for more or less than the written down value in the future your taxable profits will be adjusted in that year. I am not an accountant but this is my understanding. I would buy the used i3, it will probably be very low BIK anyway.
At the risk of being wrong again (oops) - yup! But a (possibly largely unknown) problem with the new capital write downs on cars is that when you sell the car (if for less than the tax written down value) you don't get the full depreciation allowed like you used to. Instead you have to keep claiming writing down allowances on the residue until it gets used up, which could take years (though IIRC there is a minimum value that you just get all in one go once you get there). So it is quite a big issue
trowelhead said:
I almost wish i had not tried the i3
My man maths is telling me that the depreciation will be offset by 2k fuel savings per year.
However that depreciation is going to be heavy whichever way you slice it!
i3 very cheap on lease at the moment - £220 on a 6 + 23 with 8k miles pa.My man maths is telling me that the depreciation will be offset by 2k fuel savings per year.
However that depreciation is going to be heavy whichever way you slice it!
Will do fine for my short commute to the train station and back.
And all tax deductible with 0 BIK...
https://www.contracthireandleasing.com/car-leasing...
oop north said:
But a (possibly largely unknown) problem with the new capital write downs on cars is that when you sell the car (if for less than the tax written down value) you don't get the full depreciation allowed like you used to. Instead you have to keep claiming writing down allowances on the residue until it gets used up, which could take years (though IIRC there is a minimum value that you just get all in one go once you get there). So it is quite a big issue
It's not a big issue This is how it works; you purchase a qualifying low emission car for say £30,000 (after government subsidy).
Because you are allowed 100% capital write down on this type of car, your profit is reduced by £30k straight away.
At this point, you are saving the corporation tax due on £30k, as well as any personal tax which you would have paid on this profit. So you are buying the car effectively from untaxed income.
When you sell the car, the total sale price is added as income. So, if you sell the car after 3 years for say £12,000, your profit for that year will increase by £12,000, and so of course you will then be liable to pay the applicable taxes.
You do also pay BIK on the car's list price whilst the car is owned by the company.
Ultraviolet said:
Will do fine for my short commute to the train station and back.
And all tax deductible with 0 BIK...
Unfortunately the BIK on an i3 is no longer 0%. This year it is 5% BIK and that figures increases for each of the next three years.And all tax deductible with 0 BIK...
http://www.nextgreencar.com/company-car-tax/make-m...
Ok so - let's say i went ahead regardless and bought a used i3 via company funds (approx 18k), and also maintained and insured using company funds....
How would this be treated? Like i took the 18k as a dividend? Or would i be able to write off some against tax? Or can i write nothing against tax and the car is just treated as a company asset?
Surely however it works it is better than taking extra dividends at higher tax rate?
How would this be treated? Like i took the 18k as a dividend? Or would i be able to write off some against tax? Or can i write nothing against tax and the car is just treated as a company asset?
Surely however it works it is better than taking extra dividends at higher tax rate?
So i've been told it can be written down at 18% pa - so effectively reducing taxable profit by £3420 in year 1 - saving £684 of corp tax @ 20%?
The BIK is pretty similar to that figure, so seems to cancel each other out.
Only benefit i can see is that it avoids being taxed another 20% ish if i took the cash as a dividend at higher rate. And maintenance and insurance can also be put through would those both be fully deductible off tax? If so that may swing it in favour..
Can someone tell me if the above looks accurate? Thanks!
The BIK is pretty similar to that figure, so seems to cancel each other out.
Only benefit i can see is that it avoids being taxed another 20% ish if i took the cash as a dividend at higher rate. And maintenance and insurance can also be put through would those both be fully deductible off tax? If so that may swing it in favour..
Can someone tell me if the above looks accurate? Thanks!
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