Company Vehicle Business / Vehicle dilemma
Discussion
Hi All,
Found myself with a bit of a dilemma. Quite a nice dilemma - but still a dilemma!
Set up in 2014 and business has been good - steady growth - all sweet. 2019 was a better year than 2018, and 2020 was better than 2019 - despite covid. I've just filed last years accounts and again - a good improvement to the point whereby my Accountant called me to discuss. She asked how Y/E 30/09/22 was looking. I checked our Accounts system and i've billed more in 8.5 months than i did in 12 last year, with similar costs. She basically advised that i would likely be looking at a hefty Corp Tax bill assuming things maintain until September - which looks like it will happen given order book.
As such, she suggested i spend some £. Her suggestions being:
1. Lease a car - which i don't fancy - done it before and totally knew what i was getting into but still agrieved at the end of it that of the nearly £16k i'd paid out, i didn't have a single penny to show for it. Plus, to avoid high BIK, i'd be looking at sizeable leases unless looking at likes of a MG5 which i just don't really fancy. Ours is a family of a 5 so an i3, Mini Cooper, Honda E etc doesn't really work. We used to be foster carers so have a 7 seater, which is no longer required - a 5 will suffice - but we do holiday in France twice a year so could do with something sizeable enough to get a family of 5, kids 14, 13 and 11, over there without being totally squashed in.
2. Buy property - i'd love to but despite a good year so far, i've a few clients dragging their feet with bills. It will come i'm sure, these are long term clients who always pay eventually, but i'm a little way off a deposit for now.
3. Pension top-ups - I already do this. I'm 39 and the wife is 42 - so some way from retirement - plus it's a bit boring!
4. Pay ourselves more - Can do - but bigger personal tax bills to follow.
OR
5. Buy a commercial vehicle - suggesting a pick-up. I immediately discounted this - my brother in law has a Hilux and as nice as it is - it really gets through the diesel and just isn't for me. But i got thinking about VW Transporters, Transit Customs etc.
Anyway, have done some digging and test drove a van earlier in the week. I quite liked it - and have run the numbers by my Accountant and all is good. Going to take the wife to see it Saturday and almost ready to press the button. Ticks a load of boxes - space for the family, room for the bikes in the back, perfect!
But i've had a change of heart this evening....
Two things:
1. I do about 10k a year - 5.5k of which is in two hefty trips to France - so the other 44 weeks of the year accounts for just 4.5k or so. My problem with this is DPF-related. My wife runs our other car which is a Kia Stonic Diesel and we've had a few DPF issues just because the car isn't getting the mileage - and that's the high miler of the two!
2. Conversion - The dealer who's looking to sell me this van has got me a really good deal on a 6-seat conversion but all procured separately with a local firm they use, with all the bells and whistles, including a fold down desk, power and monitor etc for use when on site (i work in construction), as well as side windows, and TVs in the back etc. My worry is that if the DPF, or anything else, causes an issue and he's linked me up with a local 'specialist' that one party may look to blame the other and leave me in the middle without a vehicle stuck right up the creek!
So, been looking.
1. There are very few petrol vans on the market and the ones that are, aren't suitable to convert into a 5 seater with loads of luggage space.
2. The electric Transporters seem a good price at £25k ish for a year old. BUT, they only have a range of 84 miles. That would be 10+ charges going to France, each way!
3. All other vans way above my £25-30k price range.
4. Electric cars under £30k whereby i could claim the VAT back (this new 130% scheme is why my Accountant is pushing this) are all pretty small - and i suspect even a Leaf or Mazda MX30 would be a bit small for a family of 5 to France.
Apologies for the long waffly post - but any thoughts from the PH 'business but with an interest in cars' massive?
Found myself with a bit of a dilemma. Quite a nice dilemma - but still a dilemma!
Set up in 2014 and business has been good - steady growth - all sweet. 2019 was a better year than 2018, and 2020 was better than 2019 - despite covid. I've just filed last years accounts and again - a good improvement to the point whereby my Accountant called me to discuss. She asked how Y/E 30/09/22 was looking. I checked our Accounts system and i've billed more in 8.5 months than i did in 12 last year, with similar costs. She basically advised that i would likely be looking at a hefty Corp Tax bill assuming things maintain until September - which looks like it will happen given order book.
As such, she suggested i spend some £. Her suggestions being:
1. Lease a car - which i don't fancy - done it before and totally knew what i was getting into but still agrieved at the end of it that of the nearly £16k i'd paid out, i didn't have a single penny to show for it. Plus, to avoid high BIK, i'd be looking at sizeable leases unless looking at likes of a MG5 which i just don't really fancy. Ours is a family of a 5 so an i3, Mini Cooper, Honda E etc doesn't really work. We used to be foster carers so have a 7 seater, which is no longer required - a 5 will suffice - but we do holiday in France twice a year so could do with something sizeable enough to get a family of 5, kids 14, 13 and 11, over there without being totally squashed in.
2. Buy property - i'd love to but despite a good year so far, i've a few clients dragging their feet with bills. It will come i'm sure, these are long term clients who always pay eventually, but i'm a little way off a deposit for now.
3. Pension top-ups - I already do this. I'm 39 and the wife is 42 - so some way from retirement - plus it's a bit boring!
4. Pay ourselves more - Can do - but bigger personal tax bills to follow.
OR
5. Buy a commercial vehicle - suggesting a pick-up. I immediately discounted this - my brother in law has a Hilux and as nice as it is - it really gets through the diesel and just isn't for me. But i got thinking about VW Transporters, Transit Customs etc.
Anyway, have done some digging and test drove a van earlier in the week. I quite liked it - and have run the numbers by my Accountant and all is good. Going to take the wife to see it Saturday and almost ready to press the button. Ticks a load of boxes - space for the family, room for the bikes in the back, perfect!
But i've had a change of heart this evening....
Two things:
1. I do about 10k a year - 5.5k of which is in two hefty trips to France - so the other 44 weeks of the year accounts for just 4.5k or so. My problem with this is DPF-related. My wife runs our other car which is a Kia Stonic Diesel and we've had a few DPF issues just because the car isn't getting the mileage - and that's the high miler of the two!
2. Conversion - The dealer who's looking to sell me this van has got me a really good deal on a 6-seat conversion but all procured separately with a local firm they use, with all the bells and whistles, including a fold down desk, power and monitor etc for use when on site (i work in construction), as well as side windows, and TVs in the back etc. My worry is that if the DPF, or anything else, causes an issue and he's linked me up with a local 'specialist' that one party may look to blame the other and leave me in the middle without a vehicle stuck right up the creek!
So, been looking.
1. There are very few petrol vans on the market and the ones that are, aren't suitable to convert into a 5 seater with loads of luggage space.
2. The electric Transporters seem a good price at £25k ish for a year old. BUT, they only have a range of 84 miles. That would be 10+ charges going to France, each way!
3. All other vans way above my £25-30k price range.
4. Electric cars under £30k whereby i could claim the VAT back (this new 130% scheme is why my Accountant is pushing this) are all pretty small - and i suspect even a Leaf or Mazda MX30 would be a bit small for a family of 5 to France.
Apologies for the long waffly post - but any thoughts from the PH 'business but with an interest in cars' massive?
My view is that Corporation Tax is only a problem if you don't have the cash to pay it.
It's tempting to look at cars, I know, but unless you're going to buy a van or commercial vehicle, you'll get clobbered one way or another on the VAT, BiK, etc. If you need or fancy a particular car, pay yourself a dividend and the tax on that and go get what you like.
If you end buying something you don't really need, you could well end up losing more money over time than you would have in just paying the corporation tax - or gain no benefit so the only benefit is the satisfaction in denying government a bit of revenue.
I'd be looking at spending on things that would protect your money and make you money and/or make your life easier. Pensions has to be considered highly.
A friend of mine runs a successful business and his office is strewn with high-end art and designer furniture sourced through auctions all of which increase in value over time but whilst in use is treated as a business expense at the point of purchase (not sure how the art counts on that, if at all but seems to work for him).
If there's nothing you need and really want to reduce your CT liability, you could always go the altruistic route and look to support local community initiatives, charities and the like. Social Value is becoming a big thing in business so this may help to tick that box and help you win more business as a result.
It's tempting to look at cars, I know, but unless you're going to buy a van or commercial vehicle, you'll get clobbered one way or another on the VAT, BiK, etc. If you need or fancy a particular car, pay yourself a dividend and the tax on that and go get what you like.
If you end buying something you don't really need, you could well end up losing more money over time than you would have in just paying the corporation tax - or gain no benefit so the only benefit is the satisfaction in denying government a bit of revenue.
I'd be looking at spending on things that would protect your money and make you money and/or make your life easier. Pensions has to be considered highly.
A friend of mine runs a successful business and his office is strewn with high-end art and designer furniture sourced through auctions all of which increase in value over time but whilst in use is treated as a business expense at the point of purchase (not sure how the art counts on that, if at all but seems to work for him).
If there's nothing you need and really want to reduce your CT liability, you could always go the altruistic route and look to support local community initiatives, charities and the like. Social Value is becoming a big thing in business so this may help to tick that box and help you win more business as a result.
Edited by StevieBee on Friday 24th June 10:14
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