Sub 120g/km shopping trolley for company car?
Discussion
Noticed this in the Sunday Times a few weeks back.
See the Go Green section about sub 120g/km emission cars.
http://driving.timesonline.co.uk/article/0,,22750-18
and this
www.cartax.co.uk/Articles/Article_Effect_Sub_120GKM_CO2.asp
It appears that you can offset the whole capital value of the car against corporation tax in the first year, so it's give Gordon £6k or have a free Citroen C1.
I was going to get a banger, but looks like I can get a new car for less.
I think you still have to pay the 15% benefit in kind on the list price, but that is unclear from the links I have above and the Revenue site.
Can anyone confirm if the captial allowance and BIK calculations are correct?
p.s. any links to which cars qualify under 120g/km - C1/107/Aygo are all the same car and are probably favourites. Don't want a Smart.
See the Go Green section about sub 120g/km emission cars.
http://driving.timesonline.co.uk/article/0,,22750-18
and this
www.cartax.co.uk/Articles/Article_Effect_Sub_120GKM_CO2.asp
It appears that you can offset the whole capital value of the car against corporation tax in the first year, so it's give Gordon £6k or have a free Citroen C1.
I was going to get a banger, but looks like I can get a new car for less.
I think you still have to pay the 15% benefit in kind on the list price, but that is unclear from the links I have above and the Revenue site.
Can anyone confirm if the captial allowance and BIK calculations are correct?
p.s. any links to which cars qualify under 120g/km - C1/107/Aygo are all the same car and are probably favourites. Don't want a Smart.
Too complicated and time consuming to answer the detailed question but - always remember that the Corporation Tax saving you make is only a saving if you pay CT in the first place.
If your company has a taxable profit of less than £10,000, it pays no tax at all. Also, most smaller UK companies only pay CT at 19%.
If your company has a taxable profit of less than £10,000, it pays no tax at all. Also, most smaller UK companies only pay CT at 19%.
I hear you. My accountant can't come back with anything useful and I pay him! The Smart garage who were advertising this (which prompted this post partly) said.. erm, dunno, try inlandrevenue.com
I'm over 10k, but I took (from the Deloitte site) "However, where a company acquires a new car which has low levels of CO2 emissions (sub 120g/km) then the capital allowances available are more attractive. The expenditure will qualify for first year allowances of 100%." to mean that you could write off the whole lot, not just 19% against profit, like it was writing off computer hardware a few years back?
Cheers
Fop.
I'm over 10k, but I took (from the Deloitte site) "However, where a company acquires a new car which has low levels of CO2 emissions (sub 120g/km) then the capital allowances available are more attractive. The expenditure will qualify for first year allowances of 100%." to mean that you could write off the whole lot, not just 19% against profit, like it was writing off computer hardware a few years back?
Cheers
Fop.
No.
You obviously don't quite understand the link between the amount of Capital Allowances you can claim and the effect it has on the Corporation Tax (CT) you will have to pay.
The tax saving you make is not the value of the capital allowance claimed but the value of the capital allowance claimed multiplied by the rate of Corporation Tax the company pays.
If the company claimed 50% capital allowances on a £10,000 vehicle, it doesn't save £5,000 tax. It saves £5,000 multipled by the rate of CT the company is paying on its profits. If the CT rate is 19%, then it actually saves tax of £950 (£5,000 x 19%). If it is not liable to CT (perhaps because its profits for the year are under £10,000), then claiming capital allowances in that year would be a waste of time as you would be claiming the allowances but getting no tax reduction for your efforts.
>> Edited by Eric Mc on Tuesday 22 November 22:28
You obviously don't quite understand the link between the amount of Capital Allowances you can claim and the effect it has on the Corporation Tax (CT) you will have to pay.
The tax saving you make is not the value of the capital allowance claimed but the value of the capital allowance claimed multiplied by the rate of Corporation Tax the company pays.
If the company claimed 50% capital allowances on a £10,000 vehicle, it doesn't save £5,000 tax. It saves £5,000 multipled by the rate of CT the company is paying on its profits. If the CT rate is 19%, then it actually saves tax of £950 (£5,000 x 19%). If it is not liable to CT (perhaps because its profits for the year are under £10,000), then claiming capital allowances in that year would be a waste of time as you would be claiming the allowances but getting no tax reduction for your efforts.
>> Edited by Eric Mc on Tuesday 22 November 22:28
That's it. No point in making claims when they don't result in a tax saving - they may end up being wasted.
Capital Allowances can usually be "tailored" to optimise the tax reduction you want but if you decide not to make a full claim in any given year, you may find that future claims will not be so generous. This is true if you have to pass up the opportunity to make a First Year Allowance (FYA) claim on an asset purchased in your most recent accounting year. If you cannot or do not want to make the FYA claim, in the following and subsequent years you will only be able to make the normal 25% Annual Allowance claim.
Capital Allowances can usually be "tailored" to optimise the tax reduction you want but if you decide not to make a full claim in any given year, you may find that future claims will not be so generous. This is true if you have to pass up the opportunity to make a First Year Allowance (FYA) claim on an asset purchased in your most recent accounting year. If you cannot or do not want to make the FYA claim, in the following and subsequent years you will only be able to make the normal 25% Annual Allowance claim.
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