Buying or leasing a tesla through a Ltd company
Discussion
Just to break this out of the best lease deals thread.... where there’s been some chat about the capital allowance on buying a tesla or any zero emissions car through a limited company...
@2003bluecat
I’m not sure I understand the VAT bit as I didn’t think VAT was deductible on anything other than commercial vehicles or items which ARE wholly and exclusively for the business.
Cheers
Noel
@2003bluecat
I’m not sure I understand the VAT bit as I didn’t think VAT was deductible on anything other than commercial vehicles or items which ARE wholly and exclusively for the business.
Cheers
Noel
Am interested in this also. There is a small amount of info on the Tesla website.
https://www.tesla.com/en_GB/support/incentives#cha...
https://www.tesla.com/en_GB/support/incentives#cha...
Noel1983 said:
To clarify, if you leased then of course you’d be able to claim some of the vat but if you leased then I don’t think you can claim capital allowance as the company doesnt own the car
I'm not sure on the VAT piece but in terms of capital allowances on leased assets, that's quite a complicated area of tax as it depends on the type of lease, whether it is a finance or operating lease and whether its long funding or not, however for the purposes of the lease deals on cars that we're looking at I'd agree that you couldn't claim capital allowances on that.I think the argument on the VAT is along the lines that if the director uses the car for personal use and therefore pays BIK, its equivalent to salary, so it would be incurred wholly and exclusively for the trade, in the same way an employee's salary would be. I'm not an expert on this though.
I’ve asked my accountant re vat will let you know his view.
Re capital allowance he says it’s definitely fine
“company cars are presumed to be available for personal use too. The company can still claim capital allowances but the user is taxed on the vehicle (and any fuel) as a benefit in kind.”
Re capital allowance he says it’s definitely fine
“company cars are presumed to be available for personal use too. The company can still claim capital allowances but the user is taxed on the vehicle (and any fuel) as a benefit in kind.”
Noel1983 said:
I’ve asked my accountant re vat will let you know his view.
Re capital allowance he says it’s definitely fine
“company cars are presumed to be available for personal use too. The company can still claim capital allowances but the user is taxed on the vehicle (and any fuel) as a benefit in kind.”
Yep agreed, this relates to the purchase of a car though, not leasing one...Re capital allowance he says it’s definitely fine
“company cars are presumed to be available for personal use too. The company can still claim capital allowances but the user is taxed on the vehicle (and any fuel) as a benefit in kind.”
Sorry for being late to the party; only just seen this.
As a PP has said - the point i was making is that capital allowances are allowed on a company asset available for private use. The individual benefitting from the private use is then taxed on the benefit as if it were extra income - so therefore there is no capital allowance restriction in relation to private use.
This seems logical to me as all employee costs are tax deductible as they are incurred wholly and exclusively for the purpose of the trade (with certain exceptions).
The legislation is that VAT is not recoverable on any ordinary car that is available for private use. HMRC will look at insurance details, where the car and keys are kept etc. to help determine this.
IMO - and this is only my opinion - this contradicts HMRCs stance on capital allowances for company cars. There is probably some legislation to back up HMRCs grow point, but to me it’s illogical (as is most of this countries tax systems - eg the increase in revenue needed from national insurance to cover future pensions being repackaged as a “workplace pension” therefore passing the cost onto employers rather than HMRC and ultimately the individual).
Anyway, I’m waffling in here.
Most car leases will allow tax relief for the net lease cost AND the VAT element to be reclaimed (with a deduction for the personal use element - further backing up my point that not being able to claim VAT on a car purchase is contradictory).
I would 9 times out of 10 recommend my clients lease a car rather than purchase - and where possible get a commercial vehicle to lower the BIK for users. But this depends on each company and individuals circumstances.
As a PP has said - the point i was making is that capital allowances are allowed on a company asset available for private use. The individual benefitting from the private use is then taxed on the benefit as if it were extra income - so therefore there is no capital allowance restriction in relation to private use.
This seems logical to me as all employee costs are tax deductible as they are incurred wholly and exclusively for the purpose of the trade (with certain exceptions).
The legislation is that VAT is not recoverable on any ordinary car that is available for private use. HMRC will look at insurance details, where the car and keys are kept etc. to help determine this.
IMO - and this is only my opinion - this contradicts HMRCs stance on capital allowances for company cars. There is probably some legislation to back up HMRCs grow point, but to me it’s illogical (as is most of this countries tax systems - eg the increase in revenue needed from national insurance to cover future pensions being repackaged as a “workplace pension” therefore passing the cost onto employers rather than HMRC and ultimately the individual).
Anyway, I’m waffling in here.
Most car leases will allow tax relief for the net lease cost AND the VAT element to be reclaimed (with a deduction for the personal use element - further backing up my point that not being able to claim VAT on a car purchase is contradictory).
I would 9 times out of 10 recommend my clients lease a car rather than purchase - and where possible get a commercial vehicle to lower the BIK for users. But this depends on each company and individuals circumstances.
2003bluecat said:
Sorry for being late to the party; only just seen this.
As a PP has said - the point i was making is that capital allowances are allowed on a company asset available for private use. The individual benefitting from the private use is then taxed on the benefit as if it were extra income - so therefore there is no capital allowance restriction in relation to private use.
This seems logical to me as all employee costs are tax deductible as they are incurred wholly and exclusively for the purpose of the trade (with certain exceptions).
The legislation is that VAT is not recoverable on any ordinary car that is available for private use. HMRC will look at insurance details, where the car and keys are kept etc. to help determine this.
IMO - and this is only my opinion - this contradicts HMRCs stance on capital allowances for company cars. There is probably some legislation to back up HMRCs grow point, but to me it’s illogical (as is most of this countries tax systems - eg the increase in revenue needed from national insurance to cover future pensions being repackaged as a “workplace pension” therefore passing the cost onto employers rather than HMRC and ultimately the individual).
Anyway, I’m waffling in here.
Most car leases will allow tax relief for the net lease cost AND the VAT element to be reclaimed (with a deduction for the personal use element - further backing up my point that not being able to claim VAT on a car purchase is contradictory).
I would 9 times out of 10 recommend my clients lease a car rather than purchase - and where possible get a commercial vehicle to lower the BIK for users. But this depends on each company and individuals circumstances.
Hi, I'm going through this decision process now, was planning to buy a Model 3 via my limited company and was wondering what the advantage of leasing is (other than cash flow). I've got the money set aside for it, and would look to purchase if from the company once it's depreciated enough. I would appreciate confirmation that I'm not being silly by not looking at lease or other finance options.As a PP has said - the point i was making is that capital allowances are allowed on a company asset available for private use. The individual benefitting from the private use is then taxed on the benefit as if it were extra income - so therefore there is no capital allowance restriction in relation to private use.
This seems logical to me as all employee costs are tax deductible as they are incurred wholly and exclusively for the purpose of the trade (with certain exceptions).
The legislation is that VAT is not recoverable on any ordinary car that is available for private use. HMRC will look at insurance details, where the car and keys are kept etc. to help determine this.
IMO - and this is only my opinion - this contradicts HMRCs stance on capital allowances for company cars. There is probably some legislation to back up HMRCs grow point, but to me it’s illogical (as is most of this countries tax systems - eg the increase in revenue needed from national insurance to cover future pensions being repackaged as a “workplace pension” therefore passing the cost onto employers rather than HMRC and ultimately the individual).
Anyway, I’m waffling in here.
Most car leases will allow tax relief for the net lease cost AND the VAT element to be reclaimed (with a deduction for the personal use element - further backing up my point that not being able to claim VAT on a car purchase is contradictory).
I would 9 times out of 10 recommend my clients lease a car rather than purchase - and where possible get a commercial vehicle to lower the BIK for users. But this depends on each company and individuals circumstances.
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