Used electric car as a company car
Discussion
From a benefit in kind point of view from next April, very efficient as the rate is zero
You can claim capital allowances at the usual rate against your profits, 18% of the car cost each year, as it’s a used car
If it’s a new car you can claim 100% against your profit in the first year. Great for short term cashflow
https://www.gov.uk/capital-allowances/business-car...
You can claim capital allowances at the usual rate against your profits, 18% of the car cost each year, as it’s a used car
If it’s a new car you can claim 100% against your profit in the first year. Great for short term cashflow
https://www.gov.uk/capital-allowances/business-car...
Edited by MOBB on Saturday 14th December 12:57
MOBB said:
From a benefit in kind point of view from next April, very efficient as the rate is zero
You can claim capital allowances at the usual rate against your profits, 18% of the car cost each year, as it’s a used car
If it’s a new car you can claim 100% against your profit in the first year. Great for short term cashflow
https://www.gov.uk/capital-allowances/business-car...
Very much the above, a new one one (from April) would probably make more sense?You can claim capital allowances at the usual rate against your profits, 18% of the car cost each year, as it’s a used car
If it’s a new car you can claim 100% against your profit in the first year. Great for short term cashflow
https://www.gov.uk/capital-allowances/business-car...
Edited by MOBB on Saturday 14th December 12:57
I’m considering doing this, I already have an EV and put that into the company. The trade off depends on your business mileage as the rate you can claim falls from 45p to 4p (the 45p falls at higher mileages)
Example. you’re depreciating a 15k asset 18% plus expenses etc so let’s call it £4000 in the year, assuming high rate tax payer you might be saving say £2000
Do 10k business miles, the extra 40p a miles is £4000, so roughly the same amount, only this time you’ve been able to take it out tax free from the company as expenses and not have to pay tax on it.
(Somebody may need to check the maths but the principal is right).
Not sure why anyone would recommend buying a new car, the 100% FYA on a new car unwinds when you sell the car, the reality is you only get tax relief on the depreciation over the life of the car, all other benefits like servicing costs being from the company are the same whether a new or used car.
Leasing is an option, if your vat registered and not flat rate registered, you can claim 59% vat back too.
Edited to fix a mistaken double negative
Example. you’re depreciating a 15k asset 18% plus expenses etc so let’s call it £4000 in the year, assuming high rate tax payer you might be saving say £2000
Do 10k business miles, the extra 40p a miles is £4000, so roughly the same amount, only this time you’ve been able to take it out tax free from the company as expenses and not have to pay tax on it.
(Somebody may need to check the maths but the principal is right).
Not sure why anyone would recommend buying a new car, the 100% FYA on a new car unwinds when you sell the car, the reality is you only get tax relief on the depreciation over the life of the car, all other benefits like servicing costs being from the company are the same whether a new or used car.
Leasing is an option, if your vat registered and not flat rate registered, you can claim 59% vat back too.
Edited to fix a mistaken double negative
Edited by Heres Johnny on Monday 16th December 08:02
Don’t buy a used one to stick in company before next April - 16% bik is on list price when new, not cost now, so if buy one at 50% new cost the bik would be 32% of cost = terrible result, albeit for short period only. I think used values might improve but March, though, due to reduction in bik from April
HJ makes a good point about business mileage, EV is better tax benefit for low business miles
HJ makes a good point about business mileage, EV is better tax benefit for low business miles
Heres Johnny said:
I’m considering doing this, I already have an EV and put that into the company. The trade off depends on your business mileage as the rate you can claim falls from 45p to 4p (the 45p falls at higher mileages)
Example. you’re depreciating a 15k asset 18% plus expenses etc so let’s call it £4000 in the year, assuming high rate tax payer you might be saving say £2000
Do 10k business miles, the extra 40p a miles is £4000, so roughly the same amount, only this time you’ve been able to take it out tax free from the company as expenses and not have to pay tax on it.
Does this mean therefore the options are:Example. you’re depreciating a 15k asset 18% plus expenses etc so let’s call it £4000 in the year, assuming high rate tax payer you might be saving say £2000
Do 10k business miles, the extra 40p a miles is £4000, so roughly the same amount, only this time you’ve been able to take it out tax free from the company as expenses and not have to pay tax on it.
Buy/lease a car privately out of your taxed income and then reclaim 45p per mile (tax free) for your business mileage
OR
Your company buys/leases an EV. Depreciation/lease costs tax deducible. VAT can be offset if VAT registered and not on the FRS. BIK is zero. Mileage is 4p per mile (tax free) for business mileage.
CzechItOut said:
Does this mean therefore the options are:
Buy/lease a car privately out of your taxed income and then reclaim 45p per mile (tax free) for your business mileage
OR
Your company buys/leases an EV. Depreciation/lease costs tax deducible. VAT can be offset if VAT registered and not on the FRS. BIK is zero. Mileage is 4p per mile (tax free) for business mileage.
Pretty muchBuy/lease a car privately out of your taxed income and then reclaim 45p per mile (tax free) for your business mileage
OR
Your company buys/leases an EV. Depreciation/lease costs tax deducible. VAT can be offset if VAT registered and not on the FRS. BIK is zero. Mileage is 4p per mile (tax free) for business mileage.
VAT is only deductable on lease (and only half of that), if the company buys it you'd be a very very very very special case to get VAT deducted on the purchase price if there was so muich as 1 mile of personal use.
BIK is 0% next year then "climbs" to I believe 1% then 2% over the following 2 years of the new list price.
The only possible long shot change, and I can't really see it happening, is if they remove the EV exemption on salary sacrifice. I'm not a accountant but I did work and still have many friends in one of the big 4, , the basic premise is salary sacrifice rules changed so that the BIK on many things including cars became the higher of the BIK tables or the actual cost of the benefit, but EV's were exempt so we pay the BIK rate (ie 0 next year). Removing the exemption would be seen as Anti Green and I think Boris is more green than the average Tory.
Heres Johnny said:
Quick update - I believe technically the law is still actually 2% BIK next year because the legislation to drop to 0% didn’t get submitted/passed due to the election
I believe that is indeed the case - here is a trade press article about ithttps://www.fleetnews.co.uk/news/fleet-industry-ne...
But there is plenty of time to introduce the legislation. Maybe it will come in the legislation following the budget in Feb?
JPJPJP said:
Heres Johnny said:
Quick update - I believe technically the law is still actually 2% BIK next year because the legislation to drop to 0% didn’t get submitted/passed due to the election
I believe that is indeed the case - here is a trade press article about ithttps://www.fleetnews.co.uk/news/fleet-industry-ne...
But there is plenty of time to introduce the legislation. Maybe it will come in the legislation following the budget in Feb?
Gassing Station | Finance | Top of Page | What's New | My Stuff