Company Classic Car

[greenie]

Don't if anyone saw it but there was an article in the driving section of The Sunday Times about owning company classic car. It said that if the car was worth less than £15000.00 the tax would be calculated on the original value i.e. 35% of next to nothing!

Has anybody got more details on this? Does this mean that the company can buy the car, insure the car, run the car etc and all the personal tax to pay is based on 35% of the original value.

Would it be possible to buy a car in need of renovation for less than £15K and then the company pays for the resoration and still get away with it?

And what does the revenue define as a classic car? Over a certain age or what?

Any info would be gratefully received and then I can post a "what classic for £15K" in general gassing!

[bjwoods]

everything yes - except the renovation - It is less than 15k and that has to be the market value, as the article says, no to basket ferrari, then company pays for restoring it then worth 60k, you WOULD be taxed on the market value (ie over 15k).

Borderline you'd probablyget away with it.

B

[plasticpig]

greenie said:

And what does the revenue define as a classic car? Over a certain age or what? Any info would be gratefully received and then I can post a "what classic for £15K" in general gassing!

The Inland Revenue define a classic car as:

1. A car older than 15 Years or older at the end of a tax year.
2. Has a market value of more than £15000 at the end of the tax year.
3. The market value exceeds the taxable benefit value calculated by the standard Car benefit charge rules.

So actually what you are looking for is a car that is not defined as a classic car by the Inland Revenue!

As an intresting side note if you earn less than £8500 a year and have a company car you wont be taxed on it. Unless of course you are a Director.

[Eric Mc]

The £8.500 includes the value of any benefits received. It's not just the Gross Wages amount.

[plasticpig]

Eric Mc said:

The £8.500 includes the value of any benefits received. It's not just the Gross Wages amount.

Thanks for that correction. Havent had a company car scheme for a couple of years now so havent read the Revenue's guidance notes recently.

[greenie]

plasticpig said:

greenie said: And what does the revenue define as a classic car? Over a certain age or what? Any info would be gratefully received and then I can post a "what classic for £15K" in general gassing! The Inland Revenue define a classic car as: 1. A car older than 15 Years or older at the end of a tax year. 2. Has a market value of more than £15000 at the end of the tax year. 3. The market value exceeds the taxable benefit value calculated by the standard Car benefit charge rules. So actually what you are looking for is a car that is not defined as a classic car by the Inland Revenue! As an intresting side note if you earn less than £8500 a year and have a company car you wont be taxed on it. Unless of course you are a Director.

So I'm actually looking for a car less than 15 years old-is that correct. That ruins it a bit. I was hoping to buy one with an original cost of a few thousand from the 60's.

Can you explain point 3 a bit more-don't understand that one.

Thanks

[Andrew Noakes]

I think the point is that to the Revenue a 'classic car' is something old and valuable (ie worth more than £15k). As far as they are concerned the car you are talking about is just 'old'. So yes, what you want is a car more than 15 years old, worth less than £15k.

I used to do exactly this - I had a Rover P6B as a company car, and I was taxed on its original purchase price of about £2000, so the tax was minimal.

[plasticpig]

greenie said:

So I'm actually looking for a car less than 15 years old-is that correct. That ruins it a bit. I was hoping to buy one with an original cost of a few thousand from the 60's. Can you explain point 3 a bit more-don't understand that one. Thanks

The rules are combinational in nature. To rephrase it a Classic Car to the Revenue is one that meets all three criteria.

1. A car older than 15 Years or older at the end of a tax year.
AND
2. Has a market value of more than £15000 at the end of the tax year.
AND
3. The market value exceeds the taxable benefit value calculated by the standard Car benefit charge rules.

Number three is basically saying that which ever way you calculate the tax (standard or classic car rules) you pay the higher amount.

So as long as the car is worth less than £15000 now you can choose any car you like registered before 1998 and the taxable benefit will be calculated on a percentage of the list price of the car including all accessories. The percentages are based on cylinder capacity:
less than or equal to: 1400cc: 15%
1401cc - 2000cc: 25%
More than 2000cc: 35%

An example including accessories:

1983 Reliant Scimitar GTC 2.8ltr:
Value now is less than 15k so does not qualify as a Classic Car under the Revenue rules.

Base Price: 11980
Auto Transmission: 320
Wofrace Wheels: 280
Fog Lamps: 48
Electric Aerial: 50
Total 12688
Taxable benefit is 35% of total beacause the car is over 2000cc
So 12688 * 0.35 = 4400.8
Assuming a Persoanl tax rate of 22%.
4400.8 * 0.22 = 976.97

So for this car you would pay just under a thousand pounds a year in tax.

(I am now probably going to get really embarrased when I get told I have calculated it wrongly )










>> Edited by plasticpig on Monday 14th November 14:31

>> Edited by plasticpig on Monday 14th November 14:32

>> Edited by plasticpig on Monday 14th November 14:36

[greenie]

Really helpful-thanks.

Do you know where to find the original cost of older cars and the options from?

E type for less than £15k-I wonder

[Andrew Noakes]

Find an old copy of Autocar or Motor magazine from the era you're looking at. They usually have a 'new car prices' list - it won't have all the options, but it will give you a start. They're quite cheap on ebay.

A sub-£15k E-type would likely be a 2+2 or a slightly scabby FHC. Edited to add: E-type 2+2 auto, £2245 8s 9d in 1966!

>> Edited by Andrew Noakes on Monday 14th November 16:32

[plasticpig]

greenie said:

Really helpful-thanks. Do you know where to find the original cost of older cars and the options from? E type for less than £15k-I wonder

Not easy online.

When I looked at this I borrowed some early to mid 70's copies of What Car and Autocar. plus had access to 10 years worth of Classic & Sports Car. That gave me a rough idea of what the Cars price was when new. I think the best approach would be to pick out a few cars you are intrested in and the contact the owners clubs to see if they have the price lists available.

Their is also at least on specialist out their who do Classic company car leasing including all servicing etc. Called Classic Car Leasing Ltd.

[Greenie]

Andrew Noakes said:

£2245 8s 9d in 1966! >> Edited by Andrew Noakes on Monday 14th November 16:32

Now that's what I am talking about! £2245*35% at 40% tax is annual tax laibility of £314!

I guess that if the original car price is hard to find it will also be hard for the revenue to find it so they will be happy to accept your figure.

[Andrew Noakes]

When I did it the company's fleet manager asked me to provide evidence of the car's original purchase price, which I did by supplying a photocopy of a Motor price listing dated the same year as the car. The Revenue never disputed the figure.

[Eric Mc]

Just because the Revenue haven't disputed a figure does not mean you are correct. The Revenue places ALL the legal obligation on getting things right fairly and squarely on the tax payer's shoulders. At the moment the Inland Revenue have admitted that they are unable to instigate sufficient inverstigations into all aspects of taxation as they are totally undermanned. Indeed, the problem is of their own making as they have had to divert approximately 1/3 of their front line personnel to the handling of the disastrous Tax Credit system. As a result, many people and businesses are getting away with all sorts of tax errors and deliberate frauds purely because the Revenue are not picking these things up. In my capacity as an accountant I have seen glaring errors and mistakes which have been submitted to the Revenue which even an individual with basic tax training should have spotted.

[TypeR]

I'm just about to sell my current Co. car and order one of these,

Comes with brand new running gear, and sub £15k with a bit of help on the invoice.

[NDT]

So a classic 60's mini works quite well.
Original purchase price in the £100's and current value of a few thousand (but certainly under 15k).

[CaptainSlow]

1960's Lotus Elan+2

http://www.pistonheads.com/classifieds/used-cars/l...

~£1,500 new

• 22%
• 22%

=£73pa

eta

Looks like the BIK rate PP mentioned have changed to:

"For vehicles registered before 1st January 1998, there is no reliable source of CO2 emissions data. If such vehicles are used as company cars, they are taxed according to engine size: Up to 1400cc, BIK 15%; 1401-2000cc, BIK 22%; Over 2000cc, BIK 32%."

Edited by CaptainSlow on Monday 10th June 15:31