Viability of running a leggy used Tesla as a company car?
Discussion
This could have gone in the EV or Business sub, so I stuck it in the general sub instead, hope this is ok!
I know buying any new EV as a company car is a no brainer given the upfront tax incentives involved, but the outlay can be quite substantial even with the tax deduction.
Which got me thinking - I believe maintenance on company cars is fully tax deductible, and what's the biggest killer of value in older EVs: the battery. If you can write the VAT and 100% of the net cost of it off against the business, then this really takes the sting out of it.
For example, a 150k mile 2017 Tesla Model S can is for sale on Autotrader right now for £17k. Say the cost of the battery is £15k to replace.
That makes a total cost before tax deductions of £32k, and you get 18% of the £17k against your tax bill (so £612) in the first year and the VAT back on the battery (£2,500) and the 20% (corporate tax) of the net battery cost back (£2,500).
You then have a Model S with a new battery for around £26k and you get a further £600 or so back each year against your corporate tax bill.
Again, perhaps the biggest advantage is then that you get the VAT back and a 100% write off against your corporation tax bill for any maintenance.
Does this sound viable to you guys?
I know buying any new EV as a company car is a no brainer given the upfront tax incentives involved, but the outlay can be quite substantial even with the tax deduction.
Which got me thinking - I believe maintenance on company cars is fully tax deductible, and what's the biggest killer of value in older EVs: the battery. If you can write the VAT and 100% of the net cost of it off against the business, then this really takes the sting out of it.
For example, a 150k mile 2017 Tesla Model S can is for sale on Autotrader right now for £17k. Say the cost of the battery is £15k to replace.
That makes a total cost before tax deductions of £32k, and you get 18% of the £17k against your tax bill (so £612) in the first year and the VAT back on the battery (£2,500) and the 20% (corporate tax) of the net battery cost back (£2,500).
You then have a Model S with a new battery for around £26k and you get a further £600 or so back each year against your corporate tax bill.
Again, perhaps the biggest advantage is then that you get the VAT back and a 100% write off against your corporation tax bill for any maintenance.
Does this sound viable to you guys?
It's an interesting scenario and one which may become more popular.
Quite often when you purchase a second hand asset in a business and apply significant work to it to bring it into a state of use, those costs would be added to the asset itself (capitalised). It does depend on the situation, but you could argue you are purchasing two capital items and amalgamating them. How does that work with second hand versus new (capital allowance write off available). What about the VAT given it's fundamentally a car that the costs are going towards? Probably best for your accountant to give/get advice on it.
Quite often when you purchase a second hand asset in a business and apply significant work to it to bring it into a state of use, those costs would be added to the asset itself (capitalised). It does depend on the situation, but you could argue you are purchasing two capital items and amalgamating them. How does that work with second hand versus new (capital allowance write off available). What about the VAT given it's fundamentally a car that the costs are going towards? Probably best for your accountant to give/get advice on it.
oop north said:
You will pay benefit in kind tax on the new list price which will skew the results a bit. Currently 2% x list price on new but going up to 5% over the next 3-4 years I think it is
That probably scuppers it then - £100k new at 2% BiK at 40% tax rate is £800 per year personal income tax.youngsyr said:
oop north said:
You will pay benefit in kind tax on the new list price which will skew the results a bit. Currently 2% x list price on new but going up to 5% over the next 3-4 years I think it is
That probably scuppers it then - £100k new at 2% BiK at 40% tax rate is £800 per year personal income tax.sasha320 said:
Great - if I’ve interpreted the thread correctly means that the Government incentivise us to buy new to pursue their environmental dream - yet we know that to tackle the environmental problem the least polluting car is the one that hsn’t been built but reused.
The Tesla in question has done 150,000 miles in 6 years.An average diesel car covering the same mileage would have produced 300 grams of CO2 per mile, or 45 tons.
For a petrol car, maybe, 55 tons.
The carbon footprint of manufacturing the Tesla is around 30 tons.
Add another 6 or 7 tons for the carbon intensity of the electricity to charge it over that distance and the combined lifetime footprint of 36-37 tons means it's less than that of just keeping an average-sized ICE on the road, let alone a large one that is comparable to the model S.
If we are talking about comparing the Tesla to a new ICE, then the comparison will be significantly more in favour of the EV, as you'd need to add the production footprint of the ICE on as well, which would add another 10-20 tons to the ICE.
As for NOx, charging an EV in the UK produces around 50 grams per mile for the natural gas contribution to the electricity mix, compared to around 100 grams for petrol. If we are talking diesel then the real world emissions of Euro 6 cars average around 500 grams per mile.
No not a typo, real world diesel NOx emissions really are that bad, ten times higher per mile than an EV.
For an EV charged from 100% renewables, its NOx emissions are negligible.
Whichever comparison you wish to use, the Tesla is significantly better.
All said by a petrolhead with an honest an open approach to this topic.
youngsyr said:
This could have gone in the EV or Business sub, so I stuck it in the general sub instead, hope this is ok!
I know buying any new EV as a company car is a no brainer given the upfront tax incentives involved, but the outlay can be quite substantial even with the tax deduction.
Which got me thinking - I believe maintenance on company cars is fully tax deductible, and what's the biggest killer of value in older EVs: the battery. If you can write the VAT and 100% of the net cost of it off against the business, then this really takes the sting out of it.
For example, a 150k mile 2017 Tesla Model S can is for sale on Autotrader right now for £17k. Say the cost of the battery is £15k to replace.
That makes a total cost before tax deductions of £32k, and you get 18% of the £17k against your tax bill (so £612) in the first year and the VAT back on the battery (£2,500) and the 20% (corporate tax) of the net battery cost back (£2,500).
You then have a Model S with a new battery for around £26k and you get a further £600 or so back each year against your corporate tax bill.
Again, perhaps the biggest advantage is then that you get the VAT back and a 100% write off against your corporation tax bill for any maintenance.
Does this sound viable to you guys?
A new battery in a 2017 150k mile model S is still a leggy car (interior, suspension etc) I know buying any new EV as a company car is a no brainer given the upfront tax incentives involved, but the outlay can be quite substantial even with the tax deduction.
Which got me thinking - I believe maintenance on company cars is fully tax deductible, and what's the biggest killer of value in older EVs: the battery. If you can write the VAT and 100% of the net cost of it off against the business, then this really takes the sting out of it.
For example, a 150k mile 2017 Tesla Model S can is for sale on Autotrader right now for £17k. Say the cost of the battery is £15k to replace.
That makes a total cost before tax deductions of £32k, and you get 18% of the £17k against your tax bill (so £612) in the first year and the VAT back on the battery (£2,500) and the 20% (corporate tax) of the net battery cost back (£2,500).
You then have a Model S with a new battery for around £26k and you get a further £600 or so back each year against your corporate tax bill.
Again, perhaps the biggest advantage is then that you get the VAT back and a 100% write off against your corporation tax bill for any maintenance.
Does this sound viable to you guys?
Why will it NEED a new battery, typical degradation is 2.5% per year. I'd suggest the Tesla would be razor blades or coke cans long before the battery becomes an issue. Also I suspect in the next few years an industry will spring up refurbing batteries, same as in the USA and for Prius elsewhere.
I run a Outlander PHEV & some of the guys on the FB forum are getting new batteries out of Mitsubishi under warranty that are under the threshold of 75% of new capacity. BUt these are 15 plated cars at 100K miles plus. I suspect the old batteries go back for rework and or recycling.
I run a Outlander PHEV & some of the guys on the FB forum are getting new batteries out of Mitsubishi under warranty that are under the threshold of 75% of new capacity. BUt these are 15 plated cars at 100K miles plus. I suspect the old batteries go back for rework and or recycling.
If its mainly for the tax incentive are you not better with a pre 2017 phev? More practical and probably cheaper to maintain.
The build quality of the early teslas is a s
tshow, everyone I know who had one complains about it.
Nice wee 16 plate panamera phev, zero tax, cheap and easy to tune to 600+ bhp.
The build quality of the early teslas is a s
tshow, everyone I know who had one complains about it.Nice wee 16 plate panamera phev, zero tax, cheap and easy to tune to 600+ bhp.
If you capitalise the car then I think you need to capitalise the battery. I see this as the same as fitting a new roof to a building; it's integral to the building. In my example of a roof, some companies will capitalise the roof as a separate asset if it's expected life is shorter that the building.
In accounting terms it would be considered a refurbishment because;
a. The building is unusable without the roof as the car is unusable without a battery,
b. the life of the connected asset is extended past it's initial economic life,
c. you've carried out work to improve the asset; by adding a new battery you've improved the range of the car
To be maintenance it would have to be work to keep the asset in a proper condition or working order; the car still works with the old battery, regardless if it only has enough power to get you to the end of your drive.
In accounting terms it would be considered a refurbishment because;
a. The building is unusable without the roof as the car is unusable without a battery,
b. the life of the connected asset is extended past it's initial economic life,
c. you've carried out work to improve the asset; by adding a new battery you've improved the range of the car
To be maintenance it would have to be work to keep the asset in a proper condition or working order; the car still works with the old battery, regardless if it only has enough power to get you to the end of your drive.
robsa said:
A 2017 Model S? Would that qualify for free supercharging? And if so, does it still qualify if it's had a new battery? That would be most handy if it did.
That was my thinking, there certainly are Model S of that era with free supecharging for life, just depends what "life" is?!OldGermanHeaps said:
If its mainly for the tax incentive are you not better with a pre 2017 phev? More practical and probably cheaper to maintain.
The build quality of the early teslas is a stshow, everyone I know who had one complains about it.
Nice wee 16 plate panamera phev, zero tax, cheap and easy to tune to 600+ bhp.
Why pre-2017 in particular - I'm not aware of a change in the tax rules then?The build quality of the early teslas is a s
tshow, everyone I know who had one complains about it.Nice wee 16 plate panamera phev, zero tax, cheap and easy to tune to 600+ bhp.
And OP, I'm tempted to do a similar thing, get an X just out of or about to be out of main warranty but still with some battery warranty. Then run it for 4-5years and be prepared to fit a new battery if I want to keep it longer after the battery warranty expires.
Even if BIK goes up, getting say 40k out of a business is to buy privately is going to cost a lot more in tax isn't it and you lose the benefits of tires, servicing etc. all being on the company.
Even if BIK goes up, getting say 40k out of a business is to buy privately is going to cost a lot more in tax isn't it and you lose the benefits of tires, servicing etc. all being on the company.
BBYeah said:
There's a youtuber called James Cooke who IIRC has a Model S with free supercharging where the battery failed. He got a new battery from Tesla and AFAIK he still has the free charging.
Free Supercharging is linked to the VIN of the car not the serial number for the battery. Intheroy it'll never expire. Even though is not worth that much money in absolute terms, it's one of the reasons why I have no intention of selling our X, having to pay to use Tesla Superchargers just seems so 'wrong'......
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