Renewing Ltd co owned Tesla (or not) Struggling w/ Man maths
Discussion
Back in 2019 I bought a Tesla Model 3 Performance through my Ltd. co. It's now all paid for and is a company asset. I claim the running costs (MOT, Tyres, Consumables, Insurance) through the Ltd co and pay the BIK, which is currently 2%
Purchase cost ~£56K
Current WBAC value: ~£20K
I can't seem to do the maths properly and work out what the true cost of chopping it in for a new one will be.
Assume BIK & running costs will be similar on new v.s old. The new one would clearly be worth a bit more to me as a) it's shinier & b) has a warranty, whereas the old car's warranty has expired.
It is it worth the company selling it (which will increase company revenue by £20k), then buying a new one for £60k? thereby reducing my profits from circa. £140k to £100k?
If I renew- I'm saving a chunk on corporation tax, but I'm also spending money to acquire a new car.
Any help with the maths would be much appreciated. Assume I already trying to minimise corp tax by maxing my pension, claiming other business expenses etc.
Purchase cost ~£56K
Current WBAC value: ~£20K
I can't seem to do the maths properly and work out what the true cost of chopping it in for a new one will be.
Assume BIK & running costs will be similar on new v.s old. The new one would clearly be worth a bit more to me as a) it's shinier & b) has a warranty, whereas the old car's warranty has expired.
It is it worth the company selling it (which will increase company revenue by £20k), then buying a new one for £60k? thereby reducing my profits from circa. £140k to £100k?
If I renew- I'm saving a chunk on corporation tax, but I'm also spending money to acquire a new car.
Any help with the maths would be much appreciated. Assume I already trying to minimise corp tax by maxing my pension, claiming other business expenses etc.
Thanks for taking the time to reply, but that didn't really help apart from clear up a couple of financial technicalities.
Whatever we call it, it's roughly £20k coming in from the sale of a fixed asset and roughly £60k out to acquire a replacement fixed asset- so it's a £40k drop in "profits" upon which the company pays corporation tax.
I guess I'm saving corp tax somewhere between 19% & 25%% of £40k - i.e. up to £10k in Corp tax.
So the net cost to the company to renew the asset is ~£30k.
(£60k-£20k)-£10k = £30k
All other running costs are roughly equal, except the company slightly benefits from a new car with a new warranty and no MOT costs for 3 years.
Yes- I'll talk to my accountant as she knows my finances in detail, but I was looking for real-world examples from people who are in a similar situation: I'm sure there are people on here who run Ltd. companies and have renewed their EV. and done the maths to justify the purchase (or not).
Thanks again.
Whatever we call it, it's roughly £20k coming in from the sale of a fixed asset and roughly £60k out to acquire a replacement fixed asset- so it's a £40k drop in "profits" upon which the company pays corporation tax.
I guess I'm saving corp tax somewhere between 19% & 25%% of £40k - i.e. up to £10k in Corp tax.
So the net cost to the company to renew the asset is ~£30k.
(£60k-£20k)-£10k = £30k
All other running costs are roughly equal, except the company slightly benefits from a new car with a new warranty and no MOT costs for 3 years.
Yes- I'll talk to my accountant as she knows my finances in detail, but I was looking for real-world examples from people who are in a similar situation: I'm sure there are people on here who run Ltd. companies and have renewed their EV. and done the maths to justify the purchase (or not).
Thanks again.
Edited by GuigiaroBertone on Wednesday 13th March 20:44
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