Leasing a pickup through my company
Discussion
I currently run two cars, a BMW 645 and a Subaru legacy. They're both 2005.
I've been considering getting a Ford Ranger wildtrack 3.2 to replace the pair of them, but as I've never done the company car thing previously I don't really understand how the costs stack up. I have my own limited company, but as I work on oil rigs I don't do many miles. I'm a 40% tax payer.
The Ford would have a total cost of £32000, on a £300 a month lease (all excluding VAT).
It's in the 27% BIK range as it's the bigger engine.
Essentially I get that my company will pay the lease, and I get the BIK, I've seen that pickups get preferential rates but not how different they would be.
What I don't get is the tax relief and how it all ends up.
This may be really simple for some of you, please understand that I've never needed to know any of this stuff and it all looks very contradictory from a starting point!
I've been considering getting a Ford Ranger wildtrack 3.2 to replace the pair of them, but as I've never done the company car thing previously I don't really understand how the costs stack up. I have my own limited company, but as I work on oil rigs I don't do many miles. I'm a 40% tax payer.
The Ford would have a total cost of £32000, on a £300 a month lease (all excluding VAT).
It's in the 27% BIK range as it's the bigger engine.
Essentially I get that my company will pay the lease, and I get the BIK, I've seen that pickups get preferential rates but not how different they would be.
What I don't get is the tax relief and how it all ends up.
This may be really simple for some of you, please understand that I've never needed to know any of this stuff and it all looks very contradictory from a starting point!
Questions can be simple - answers are usually much more complicated.
The general rule is that a car supplied by a company to a director or employee will be clobbered for PAYE under the Benefit in Kind rules.
Motor cars, on the whole, are also eligible for Capital Allowances - but at very poor rates.
Pickups MIGHT be able to be classified as an item of "Plant and Machinery" (as a "Commercial Vehicle") rather than a "Motor Car". If they can, suddenly the BIK and the Capital Allowances become a lot more tax friendly.
Based on the circumstances you have outlined, I am doubtful that a pickup would be considered as a normal item of Plant and Machinery for your business so would not be eligible for the better rates of Capital Allowances.
And, if not possible to classify the item as "Plant and Machinery", the knock on effect is that the Benefit in Kind rules become those for a car rather than a "Commercial Vehicle" - which is not good.
The general rule is that a car supplied by a company to a director or employee will be clobbered for PAYE under the Benefit in Kind rules.
Motor cars, on the whole, are also eligible for Capital Allowances - but at very poor rates.
Pickups MIGHT be able to be classified as an item of "Plant and Machinery" (as a "Commercial Vehicle") rather than a "Motor Car". If they can, suddenly the BIK and the Capital Allowances become a lot more tax friendly.
Based on the circumstances you have outlined, I am doubtful that a pickup would be considered as a normal item of Plant and Machinery for your business so would not be eligible for the better rates of Capital Allowances.
And, if not possible to classify the item as "Plant and Machinery", the knock on effect is that the Benefit in Kind rules become those for a car rather than a "Commercial Vehicle" - which is not good.
Eric Mc said:
Questions can be simple - answers are usually much more complicated.
The general rule is that a car supplied by a company to a director or employee will be clobbered for PAYE under the Benefit in Kind rules.
Motor cars, on the whole, are also eligible for Capital Allowances - but at very poor rates.
Pickups MIGHT be able to be classified as an item of "Plant and Machinery" (as a "Commercial Vehicle") rather than a "Motor Car". If they can, suddenly the BIK and the Capital Allowances become a lot more tax friendly.
Based on the circumstances you have outlined, I am doubtful that a pickup would be considered as a normal item of Plant and Machinery for your business so would not be eligible for the better rates of Capital Allowances.
And, if not possible to classify the item as "Plant and Machinery", the knock on effect is that the Benefit in Kind rules become those for a car rather than a "Commercial Vehicle" - which is not good.
He's leasing not buying so capital allowances aren't relevant. As for not being a normal item of P&M, the OP hasn't said what his or her business is or what equipment may be required to be carried by the vehicle.The general rule is that a car supplied by a company to a director or employee will be clobbered for PAYE under the Benefit in Kind rules.
Motor cars, on the whole, are also eligible for Capital Allowances - but at very poor rates.
Pickups MIGHT be able to be classified as an item of "Plant and Machinery" (as a "Commercial Vehicle") rather than a "Motor Car". If they can, suddenly the BIK and the Capital Allowances become a lot more tax friendly.
Based on the circumstances you have outlined, I am doubtful that a pickup would be considered as a normal item of Plant and Machinery for your business so would not be eligible for the better rates of Capital Allowances.
And, if not possible to classify the item as "Plant and Machinery", the knock on effect is that the Benefit in Kind rules become those for a car rather than a "Commercial Vehicle" - which is not good.
I'm aware that it will not be eligible for Capital Allowances if leased - although other costs become deductible instead in a leasing situation.
He has indicated that the vehicle is not actually needed for the purpose of the trade.
My concern is that the vehicle is not being acquired "wholly and exclusively for the purpose of the trade" - which could cause a problem in reclaiming whatever costs would otherwise be claimable.
It would also ensure that the Benefit in Kind arising could also be punitive.
He has indicated that the vehicle is not actually needed for the purpose of the trade.
My concern is that the vehicle is not being acquired "wholly and exclusively for the purpose of the trade" - which could cause a problem in reclaiming whatever costs would otherwise be claimable.
It would also ensure that the Benefit in Kind arising could also be punitive.
The pickup is purely because I've heard they were cheaper for tax. I don't have any need for it as a commercial vehicle and my business mileage would be minimal.
I'm looking into this purely as a way of getting something that would replace both of my cars in a cost effective way, if it's not cost effective I'll continue to run the cars as normal.
I'm looking into this purely as a way of getting something that would replace both of my cars in a cost effective way, if it's not cost effective I'll continue to run the cars as normal.
CaptainSlow said:
Speed addicted said:
The pickup is purely because I've heard they were cheaper for tax. .
Those days have gone.Eric Mc said:
Even if it's not in use in the trade?
In terms of BIK, why should it be taxed differently - the BIK rates and criteria are well known. When I looked into it, the real "grey" areas were related to dual use vehicles such as VW Tansporter Combi and the tests about manufacturer classification vs intended use and how HMRC definitions were vague.
When one looks at http://comcar.co.uk/newcar/companycar/vancalc/?clk... the vehicles are no longer listed although pickups satisfying the HMRC qualifying criteria are there (including double cabs).
Eric Mc said:
So, as has been said, HMRC are much tighter with their definitions as to what qualifies as a "Commercial Vehicle" than they used to be.
HMRC aren't tighter on what qualifies as a commercial vehicle, they are getting tighter on non justifiable use of a commercial vehicle.Gassing Station | Finance | Top of Page | What's New | My Stuff