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Discussion
I'm looking at getting a Caterham and my budget is £zero.
I'm in the fortunate position of owning a company that has some cash in reserve for future tax bills and expenditure. The reality is that is will sit there for months if not years to come, earning no interest and being swiftly eroded by the rust of inflation.
Now it strikes me that I could lend that money to myself and buy something childish and impractical, a Caterham for example. I'd have to pay it back within a year for tax reasons but in the meantime.....
£20,000 worth of Caterham will cost £21,000 in a years' time because of inflation and obviously they don't depreciate, it's basically an automotive hedge against inflation, much more sensible than holding too much cash wouldn't you say?
I'm thinking that, not only would it be rude not to, it's almost Corbyn-esque level fiscal irresponsibility to do anything else.
Tell me I'm wrong (please don't).
I'm in the fortunate position of owning a company that has some cash in reserve for future tax bills and expenditure. The reality is that is will sit there for months if not years to come, earning no interest and being swiftly eroded by the rust of inflation.
Now it strikes me that I could lend that money to myself and buy something childish and impractical, a Caterham for example. I'd have to pay it back within a year for tax reasons but in the meantime.....
£20,000 worth of Caterham will cost £21,000 in a years' time because of inflation and obviously they don't depreciate, it's basically an automotive hedge against inflation, much more sensible than holding too much cash wouldn't you say?
I'm thinking that, not only would it be rude not to, it's almost Corbyn-esque level fiscal irresponsibility to do anything else.
Tell me I'm wrong (please don't).
You’re right entirely.
You’ll also be contributing to the economy with insurance and servicing. Rishi (if he gets in) will thank you.
You will also be a lot happier. You will free up your counselling space, your local NHS trust will thank you.
People will smile at your wonderful car as you pass.
Win win. Do it.
You’ll also be contributing to the economy with insurance and servicing. Rishi (if he gets in) will thank you.
You will also be a lot happier. You will free up your counselling space, your local NHS trust will thank you.
People will smile at your wonderful car as you pass.
Win win. Do it.
A500leroy said:
Risky.
With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
More risk of being bitten by a dog if you’re a postie. With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
He wants encouragement Leroy!!
Austin_Metro said:
A500leroy said:
Risky.
With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
More risk of being bitten by a dog if you’re a postie. With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
He wants encouragement Leroy!!
His choice if he wants to play with his /familys security though.
If you needed the money in 18months time and could only sell it for £16k, would you be able to find the other £4k? If the answer is a comfortable yes then I'd go for it! Life's too short and all that... If it would be a struggle then I'd probably take the more disciplined approach and avoid the loan.
It's worth considering that borrowing more than £10k will automatically trigger the requirement for it to be taxed as a Benefit In Kind, if I'm not mistaken you'll also incur 13.8% National Insurance charge against the full amount IF you haven't fully repaid it within 9months of the end of your business's financial year. You also can't simply pay the loan off and take another back out the next day, there's a one month cooling off period to avoid this type of tax avoidance.
In short, if you're able to afford the potential drop in value then I'd talk with your accountant to confirm the exact details.
It's worth considering that borrowing more than £10k will automatically trigger the requirement for it to be taxed as a Benefit In Kind, if I'm not mistaken you'll also incur 13.8% National Insurance charge against the full amount IF you haven't fully repaid it within 9months of the end of your business's financial year. You also can't simply pay the loan off and take another back out the next day, there's a one month cooling off period to avoid this type of tax avoidance.
In short, if you're able to afford the potential drop in value then I'd talk with your accountant to confirm the exact details.
A500leroy said:
Risky.
With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
Life is to short. Get the Caterham! Even if you lose a few grand it has to be worth it for the experience! With the impending doom of winter coming and 3-4k energy bills that 20k car could soon become a 18k just to offload it and get some money in.
Id be cautious and wait till winter.
The way I see it, the biggest costs in car ownership are depreciation, interest costs, opportunity cost of the cash, insurance and maintenance.
With a twenty year old Caterham in the scenario I've outlined, you you are minimising pretty much all of these. It will be the cheapest car I ever buy as I'll never have something that sits in garage and trebles in value.
I'm gonna do it!
Now I just have to tell Mrs OT.
With a twenty year old Caterham in the scenario I've outlined, you you are minimising pretty much all of these. It will be the cheapest car I ever buy as I'll never have something that sits in garage and trebles in value.
I'm gonna do it!
Now I just have to tell Mrs OT.
Ossiantoad said:
The way I see it, the biggest costs in car ownership are depreciation, interest costs, opportunity cost of the cash, insurance and maintenance.
With a twenty year old Caterham in the scenario I've outlined, you you are minimising pretty much all of these. It will be the cheapest car I ever buy as I'll never have something that sits in garage and trebles in value.
I'm gonna do it!
Now I just have to tell Mrs OT.
Awesome, looking forward to some photos once you’ve found the right vehicle.With a twenty year old Caterham in the scenario I've outlined, you you are minimising pretty much all of these. It will be the cheapest car I ever buy as I'll never have something that sits in garage and trebles in value.
I'm gonna do it!
Now I just have to tell Mrs OT.
Strongly recommend talking with your accountant first, again if the timing isn’t right your business will have to pay almost £3K just in NI contributions for the directors loan and that’s before considering the BIK.
Ossiantoad said:
Mikebentley said:
Do it, do it. Can it not be put down as a company pool car?
Tell me more, what's one of them?Aventador 700 said:
Don’t listen to LeroyLoser advice, get it done and have some fun 
Lets hope his company dont suddenly need the money tied up in the car and the car market collapses.I thought being in buisness meant you were cautious with capital and invested it in the company not a folly.
Still theres always jobs at Aldi it the company goes bump.
A500leroy said:
Aventador 700 said:
Don’t listen to LeroyLoser advice, get it done and have some fun
Lets hope his company dont suddenly need the money tied up in the car and the car market collapses.I thought being in buisness meant you were cautious with capital and invested it in the company not a folly.
Still theres always jobs at Aldi it the company goes bump.
over cautious and no life imo, over cautious comes from a lack of confidence ime.Edited by Aventador 700 on Sunday 24th July 09:23
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