Used BMW i3 - 100% Write Off Against Tax?

[trowelhead]

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!

[trowelhead]

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.

Edited by EddieSteadyGo on Tuesday 15th September 19:09

Thanks for the reply - i was hoping this wasn't the case!

Oh well - will either have to buy a low spec new one or buy a used one personally...

Thanks for clarifying this

[trowelhead]

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.

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)

[trowelhead]

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.

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 *

[trowelhead]

EddieSteadyGo said:

https://www.gov.uk/government/uploads/system/uploa...

Page 8, Table 3. Makes it clear only applies to new cars.

Nooooooooo!!

Thanks for the link, not sure what to do now...

[trowelhead]

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

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!

[trowelhead]

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?

[trowelhead]

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!

[trowelhead]

Cheers, seems like it makes sense then vs buying personally?

[trowelhead]

oop north said:

I really cannot answer that as corporation tax, vat, national insurance, dividend taxes, the number of miles you do, how often your tyres need replacing, how much will maintenance be, how long you keep it, benefit in kind tax all affect the answer... It's a long list! I keep doing the sums for myself but have never found a car that I definitely want enough to be able to get round to doing it and go through hassle with swapping insurance over to being in the company's name etc. Leccy cars don't have enough range for me (short of a tesla and that wouldn't do some of my journeys easily) and anything else has always been cheaper privately. Another problem is the i3 has only four seats (need five), the Leaf is hideous and only 80 miles and I just didn't fancy the Outlander Phev. Sorry if that's not the clear answer you want

Thanks alot - yeah i wish it was simple!

I'm now leaning towards getting a new one on a business lease where it is all 100% deductible. Tesla model 3 will be for you then?

[trowelhead]

oop north said:

(have a one third share in 11 kW wind turbine)

That's awesome! Would love to hear how you got into that! Is it all sold back to government feed in tariff?

I'm pretty much all but decided to go down the new / business contract hire route, should be ordering this week, have requested a few quotes - if anyone knows a good bmw dealer / broker i'm all ears

I want to put my money where my mouth is and support EV tech going forward.

[trowelhead]

Bloody hell sounds like a nightmare! Worth it in the end?

Rex works perfect for what you are looking for. Have you taken bmw up on a 2 day test?

I'm ordering mine today.

Decided to lease so I can get spec I want, plus i want to fix the depreciation (it could be one of those cars where lease is cheaper than depreciation due to unknown resale values and demand) it's also on a fully maintained lease so nothing to worry about. 2 year term so most probably just in time for next gen evs to be released!

Plus running it through company and very minimal fuel costs mean it works out quite well!

[trowelhead]

oop north said:

I have done nothing about a test yet (been swamped with work in recent months so no time to do it yet) - need to, so I can check (1) comfy for wife (2) the headlights aren't totally poo (have seen they aren't much good and we are a mile from the nearest street lamp (3) it isn't impractically small for us. Fancy buying outright through the company as am not keen on being tied in to a fixed period - may even consider a used one as that looks to shave a good bit off cost at the start. I fancy a tesla really but I would want to go for a 90 for the range and the cost gets rather high!

Would like to get some solar panels and a tesla wall but not sure if can tie the windmill into that - plus unsure how good the quality of power is to the outbuilding - would want to have a decent speed charging system but we didn't think of any of this when we did the house 8 years ago... So might all be too expensive

Back in the real world...

Have a test drive, i bet you'll like it more than you expect. They are not as small as they look. Plenty of space inside. I went for the LED lights which is an improvement.
I'll see how i get on with the i3 - will consider a Tesla next time!

P.S i had my test drive from Ashley at Machester williams bmw - worth popping in though as didn't get much luck via phone or email

Edited by trowelhead on Tuesday 20th October 14:18