Car leasing - HELP !!!
Discussion
Right, I can't seem to understand this whatsoever & therefore wouldn't mind a bit of help.
Scenario:
Me, company owner, wants to lease a car through the company
The retail price of the car is circa £70000
The lease cost per month is £700 + VAT
Right, so I understand that as a VAT registered business I will be able to claim the VAT back, or will I ? I've read somewhere that for expensive cars a certain amount is a 'disallowable portion'.
Also, how does leasing effect my personal tax ?
I'm really struggling to get a straight answer & its doing my head in.
Scenario:
Me, company owner, wants to lease a car through the company
The retail price of the car is circa £70000
The lease cost per month is £700 + VAT
Right, so I understand that as a VAT registered business I will be able to claim the VAT back, or will I ? I've read somewhere that for expensive cars a certain amount is a 'disallowable portion'.
Also, how does leasing effect my personal tax ?
I'm really struggling to get a straight answer & its doing my head in.
If the car has private usage associated to it you can only claim back 50% of the VAT element.
As to company car tax, you'll have to pay that at whatever rate is applicable to it.
If it's for sole business use (and you can prove it), you can reclaim 100% of the VAT and no company car tax is eligable.
As to company car tax, you'll have to pay that at whatever rate is applicable to it.
If it's for sole business use (and you can prove it), you can reclaim 100% of the VAT and no company car tax is eligable.
Phil Hopkins said:
If it's for sole business use (and you can prove it), you can reclaim 100% of the VAT and no company car tax is eligable.
Virtually impossible though in most cases.
How the company pays for the vehicle is irrelevant to you as an employee. You will be taxed on it as a benefit in kind based on the list price & emmissions of the vehicle and tax taken by ammendment of your PAYE tax code.
The company can claim 50% of the VAT back and yes, there is an "expnsive cars" addback on lease costs and this means the company will pay more corp tax. For exmaple, the £700per month may be restricted to say only £400 being allowable against profits.
My thinking is this. If I buy a £70k car via the balloon payment route, payments would be circa £1k per month. However, to do this personally would mean paying myself this money which then pays the bill. So, this £1k every month is then seen as my earnings & hence gets taxed & also does nothing for the company profit levels & so gets hit for corp tax.
If however I bought through the company, not only would I save on my personal tax bill but also the profits the business makes would reduce & therefore so does the corp tax bill.
Obviously I know that I would get hit for some sort of BIK, but would this amount be more than the savings I would make ?
Suspect I should speak to the accountant. I was just running it past people on here first to avoid hassling him.
If however I bought through the company, not only would I save on my personal tax bill but also the profits the business makes would reduce & therefore so does the corp tax bill.
Obviously I know that I would get hit for some sort of BIK, but would this amount be more than the savings I would make ?
Suspect I should speak to the accountant. I was just running it past people on here first to avoid hassling him.
Gassing Station | Business | Top of Page | What's New | My Stuff