Declaring and paying BIK taxes for EV company car

[996c2]

My wife and I set up a limited company to invest in a couple of BTL properties 3 years ago. We are both shareholders and I am the sole director. The company is making a small profit (approx. £25k/year) and we are happy to leave this in the business to invest in further properties when the time is right. The company is not paying any salary or dividends and is not registered for PAYE.

As the company account is very simple, I have been doing the accounts and filling it myself.

To take advantage of the current ultra-low BIK taxes for electric vehicles, I have decided to buy an electric company car for my personal use via our limited company. I understand that I will need to declare the company car as a BIK via a P11D but I am not sure how to go about this. The easiest solution would be to pay an accountant to sort it out but, if the process is not too difficult, I would rather do it myself.

I would be grateful for any advice on declaring and paying taxes on a company car.

[996c2]

Fastlane said:

Your employer (i.e. you), will need to complete a P46 Car form to let HMRC know that you, as an employee, have a company car. By April, the employer will need to complete a P11Db form and a P11d form which they send to HMRC. HMRC will use these to update your personal tax code and calculate the employer's NI, which the employer will need to pay. You, as the employee, then use the P11d form to complete your self assessment tax return. To complete the P11Db form, the employer will need a PAYE number. I do all this myself as it is pretty straightforward, but I ran it past my accountant first, as should you.

See here: https://www.gov.uk/tell-hmrc-company-car

Thanks Fastlane for the comprehensive reply.

I guess step 1 would be for my company to register for PAYE and then complete the P46 Car form.

You mentioned that the P11Db and P11D forms would need to be done by April and HMRC will calculate the employer's NIC from that. Does that mean that my company only has to pay the employer's NIC once a year (rather than monthly if it was paying me a monthly salary)? As my company has never been PAYE registered before, I would be grateful if you (or anyone) could explain what I my obligations are once my company is registered.

I will be declaring the company car BIK on my self assessment tax return as you've suggested and I guess I will have until Jan 2023 to pay this off. Is this right?

[996c2]

Fastlane said:

Yes, you will need to register with HMRC. In terms of PAYE registration, I am not entirely sure what the current process is as my payroll company sorted that out quite a few years ago when I set up my company. There is a lot of information on the HMRC website that I linked to and this should tell you want you need to do and your on-going responsibilities. In terms of employer's NI, you will need to complete the P11D and P11Db only once per year and then the employer's NI is due to be paid by lump sum by 6th July (there is no employee's NI due on company cars).

In terms of personal tax on the BiK, it will indeed be due by the following January, but remember that your future payments on account will increase.

Thanks Fastlane for the informative replies and putting my mind at ease on this matter.

I'll be on the phone to HMRC to register for PAYE first thing tomorrow!