Discussion
I am looking to PCP a 2019 Audi R8. Putting £16,000 deposit down.
My PAYE salary is £42,000 per annum
I am also going to start taking dividends from my business at £xxxx a month so it easily shows I have enough disposable income to afford the vehicle.
I want to do dividends I will pay slightly less tax
A friend of mine has said finance companies will not take my dividends into account?
I am going wait three months so they can see them consistently going in and not them not been spent.
Is this the case for car finance they wouldn’t look at my dividends?
My PAYE salary is £42,000 per annum
I am also going to start taking dividends from my business at £xxxx a month so it easily shows I have enough disposable income to afford the vehicle.
I want to do dividends I will pay slightly less tax
A friend of mine has said finance companies will not take my dividends into account?
I am going wait three months so they can see them consistently going in and not them not been spent.
Is this the case for car finance they wouldn’t look at my dividends?
If a lender is lending you enough that they're going to take a good look at your income over and above your salary, then won't they want to see a couple of year's worth of accounts for your business? Rather than that you are able to pay a grand in divvies for three months running which, tbh, doesn't mean a great deal? I should stress I'm no expert in such matters but just thinking what I'd want to see before lending what I presume is an amount substantially more than your annual salary.
Roger Irrelevant said:
If a lender is lending you enough that they're going to take a good look at your income over and above your salary, then won't they want to see a couple of year's worth of accounts for your business? Rather than that you are able to pay a grand in divvies for three months running which, tbh, doesn't mean a great deal? I should stress I'm no expert in such matters but just thinking what I'd want to see before lending what I presume is an amount substantially more than your annual salary.
I will be paying myself around £5,000 per month in dividends. My current expenditure is around £1,000 a month prior to purchasing the car. PCP is looking at around £1,000 pm with £16,000-£20,000 in. Business has been running since 29th April 2020. Don’t want buy it through the business will be on a personal purchase.
Jacob7070 said:
I am looking to PCP a 2019 Audi R8. Putting £16,000 deposit down.
My PAYE salary is £42,000 per annum
I am also going to start taking dividends from my business at £xxxx a month so it easily shows I have enough disposable income to afford the vehicle.
I want to do dividends I will pay slightly less tax
A friend of mine has said finance companies will not take my dividends into account?
I am going wait three months so they can see them consistently going in and not them not been spent.
Is this the case for car finance they wouldn’t look at my dividends?
My advice would be to scale back your ambitions lolMy PAYE salary is £42,000 per annum
I am also going to start taking dividends from my business at £xxxx a month so it easily shows I have enough disposable income to afford the vehicle.
I want to do dividends I will pay slightly less tax
A friend of mine has said finance companies will not take my dividends into account?
I am going wait three months so they can see them consistently going in and not them not been spent.
Is this the case for car finance they wouldn’t look at my dividends?
Have you done research on the running costs for an R8? Insurance, servicing, tyres, brakes etc?
RUSTILLDOWN said:
My advice would be to scale back your ambitions lol
Have you done research on the running costs for an R8? Insurance, servicing, tyres, brakes etc?
I think my disposable income will more than enough to cover the running costs. Unless I have complete miss calculated it. Have you done research on the running costs for an R8? Insurance, servicing, tyres, brakes etc?
I know the Audi R8 performance comes with the carbon ceramic which was very expensive but they should not need replacing in the lifetime of my ownership. My insurance is £1,134 for the year so going to pay that in full. Fuel £300pm Tyres £1,000 a year etc
AudiMan9000 said:
It sounds like you might be over stretching yourself.
With £42,000 per year PAYE and £60,000 a year in dividends. It’s good to hear this advice and to be challenged so I do think about it more so I do appreciate this. If you just listen to people who say yes all the time it’s not always a good thing.
Jacob7070 said:
AudiMan9000 said:
It sounds like you might be over stretching yourself.
With £42,000 per year PAYE and £60,000 a year in dividends. It’s good to hear this advice and to be challenged so I do think about it more so I do appreciate this. If you just listen to people who say yes all the time it’s not always a good thing.
I would either wait twelve months and get £60k in dividends and pay that down.
Or set your ambitions on something around £50 - £60k sales price?
What is driving the desire to push for a 2019 R8? Sounds like something I would do in my early 20's financially. You haven't shared all your finances (mortgages, pensions, dependents etc. - and I don't expect you to) but it feels like an unnecessary strain.
mike9009 said:
Jacob7070 said:
AudiMan9000 said:
It sounds like you might be over stretching yourself.
With £42,000 per year PAYE and £60,000 a year in dividends. It’s good to hear this advice and to be challenged so I do think about it more so I do appreciate this. If you just listen to people who say yes all the time it’s not always a good thing.
I would either wait twelve months and get £60k in dividends and pay that down.
Or set your ambitions on something around £50 - £60k sales price?
What is driving the desire to push for a 2019 R8? Sounds like something I would do in my early 20's financially. You haven't shared all your finances (mortgages, pensions, dependents etc. - and I don't expect you to) but it feels like an unnecessary strain.
So with monthly income of around £7300 pm. Minus current £1000 expenditure leaves me £6300pm
Pension I pay out of my PAYE and I already put £10,000 a year into and have done for the last 3 years. This is separate from my dividends and PAYE.
I am 31 so planning to have children in 2 years which is when I would switch to a sensible car.
I am torn between 2019 R8 and the pre facelift 2018 which is £20k cheaper. Love them both.
Mr Whippy said:
No mention of the depreciation? Don’t these depreciate like a brick?
Any way why not just finance it monthly?
Do you really want to own it outright?
That’s what I want to do, finance it on PCP for 24 months. Any way why not just finance it monthly?
Do you really want to own it outright?
That’s my question with my dividends, PAYE and deposit would I get finance as a friend told me dividends don’t go towards your income for affordability
My advice would be talk to your accountant / FD. You might be able to structure salary/dividends payments a little more efficiently. The problem that i've always been told is that taking dividends monthly HMRC can view it as dodging tax.
We typically pay a dividend every quarter.
I'd also consider the car that you're looking at. Unless the R8 is your dream car i'd maybe have a look at the Taycan and take advantage of the extremely low company car tax rates.
I have personally PCPd a car since starting the business (June 2019) which was our Volvo in March 2020 but it was replacing an existing Volvo PCP and that went through without any issues (household income was around the same levels it was when I was PAYE) - saying that it was an upgrade to a higher model so our payments did go up.
In summary, based on the figures you've provided i'd say 'affordability' is ok but the challenge will be proving it to the garage. We've just paid a deposit on a Taycan Cross Turismo and have provided approved Yr 1 accounts and a set of management accounts for the first 9 months of Yr 2 trading to prove our income.
We typically pay a dividend every quarter.
I'd also consider the car that you're looking at. Unless the R8 is your dream car i'd maybe have a look at the Taycan and take advantage of the extremely low company car tax rates.
I have personally PCPd a car since starting the business (June 2019) which was our Volvo in March 2020 but it was replacing an existing Volvo PCP and that went through without any issues (household income was around the same levels it was when I was PAYE) - saying that it was an upgrade to a higher model so our payments did go up.
In summary, based on the figures you've provided i'd say 'affordability' is ok but the challenge will be proving it to the garage. We've just paid a deposit on a Taycan Cross Turismo and have provided approved Yr 1 accounts and a set of management accounts for the first 9 months of Yr 2 trading to prove our income.
pmanson said:
My advice would be talk to your accountant / FD. You might be able to structure salary/dividends payments a little more efficiently. The problem that i've always been told is that taking dividends monthly HMRC can view it as dodging tax.
We typically pay a dividend every quarter.
I'd also consider the car that you're looking at. Unless the R8 is your dream car i'd maybe have a look at the Taycan and take advantage of the extremely low company car tax rates.
I have personally PCPd a car since starting the business (June 2019) which was our Volvo in March 2020 but it was replacing an existing Volvo PCP and that went through without any issues (household income was around the same levels it was when I was PAYE) - saying that it was an upgrade to a higher model so our payments did go up.
In summary, based on the figures you've provided i'd say 'affordability' is ok but the challenge will be proving it to the garage. We've just paid a deposit on a Taycan Cross Turismo and have provided approved Yr 1 accounts and a set of management accounts for the first 9 months of Yr 2 trading to prove our income.
I did have a look at the EV grants and the benefits you get of having an electric car but yes the car is a dream and it feels very silly that I can even have a conversation about buying one. We typically pay a dividend every quarter.
I'd also consider the car that you're looking at. Unless the R8 is your dream car i'd maybe have a look at the Taycan and take advantage of the extremely low company car tax rates.
I have personally PCPd a car since starting the business (June 2019) which was our Volvo in March 2020 but it was replacing an existing Volvo PCP and that went through without any issues (household income was around the same levels it was when I was PAYE) - saying that it was an upgrade to a higher model so our payments did go up.
In summary, based on the figures you've provided i'd say 'affordability' is ok but the challenge will be proving it to the garage. We've just paid a deposit on a Taycan Cross Turismo and have provided approved Yr 1 accounts and a set of management accounts for the first 9 months of Yr 2 trading to prove our income.
Would it be best me just putting myself on payroll? Put my salary at £60,000 alongside my other job at £42,000 and then when I get the car just cancel the PAYE and then just give my self a lump sum in dividends to cover what I want for the year? Or quarter as you said?
I will have another chat with my accountant and have another look into electric cars.
Sheepshanks said:
I’ve done a couple of PCPs in the past, including one with VWFS, to take advantage of deposit contributions. I get the minimum base salary, rest as divi, and there wasn’t any query with either of them. Have things changed now?
I think my friend mentioned VWFS, he works at a Bentley / Bugatti dealership. So salary and dividend would be fine?
I don’t want to buy the car through the business.
Edited by Jacob7070 on Sunday 11th April 09:04
OP,
I can’t answer for all finance companies but I know Toyota Financial Services do not ask about an applicant’s income.
Often, the proposals auto accept if the customer has a good credit rating. Sometimes TFS ask to see bank statements to support the lend.
I suppose if the finance company asked to see bank statements then they would see your PAYE salary as well as the dividends payments going into your bank.
HTH.
P.S jammy git being in a position to get an R8. Lovely motors!
I can’t answer for all finance companies but I know Toyota Financial Services do not ask about an applicant’s income.
Often, the proposals auto accept if the customer has a good credit rating. Sometimes TFS ask to see bank statements to support the lend.
I suppose if the finance company asked to see bank statements then they would see your PAYE salary as well as the dividends payments going into your bank.
HTH.
P.S jammy git being in a position to get an R8. Lovely motors!
Well done - sounds like you are doing well, especially for your age.
And a R8 is a great car choice.
You said your monthly income is £7,300 before expenditure, my maths would suggest a salary of £42k plus £60k in dividends would net (after tax) £6,160 a month.
So you might be missing out the extra tax you would need to pay on the dividends, plus combining it with your £42k salary, would result in a reduction in you tax free allowance.
And a R8 is a great car choice.
You said your monthly income is £7,300 before expenditure, my maths would suggest a salary of £42k plus £60k in dividends would net (after tax) £6,160 a month.
So you might be missing out the extra tax you would need to pay on the dividends, plus combining it with your £42k salary, would result in a reduction in you tax free allowance.
Jacob7070 said:
No dependents, all my other bills equate to £780pm but my partner and I both put £1,000 in our joint account.
So with monthly income of around £7300 pm. Minus current £1000 expenditure leaves me £6300pm
Pension I pay out of my PAYE and I already put £10,000 a year into and have done for the last 3 years. This is separate from my dividends and PAYE.
I am 31 so planning to have children in 2 years which is when I would switch to a sensible car.
I am torn between 2019 R8 and the pre facelift 2018 which is £20k cheaper. Love them both.
So with monthly income of around £7300 pm. Minus current £1000 expenditure leaves me £6300pm
Pension I pay out of my PAYE and I already put £10,000 a year into and have done for the last 3 years. This is separate from my dividends and PAYE.
I am 31 so planning to have children in 2 years which is when I would switch to a sensible car.
I am torn between 2019 R8 and the pre facelift 2018 which is £20k cheaper. Love them both.
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