Declaring and paying BIK taxes for EV company car

[48k]

FWIW said:

48k said:

Why wouldn't you?

Because at the moment you can sell a lightly used one for more than (there or thereabouts) the price of a new one. Get the latest model blah blah…
Why would you?

The second hand market is nuts right now because of Covid are you genuinely confident you can buy new EV now (that will be delivered in what 6 months time?) run it for however long you are suggesting to keep it that is less than 3 years, and sell it for more than the new equivalent model? I'm not.

[FWIW]

48k said:

The second hand market is nuts right now because of Covid are you genuinely confident you can buy new EV now (that will be delivered in what 6 months time?) run it for however long you are suggesting to keep it that is less than 3 years, and sell it for more than the new equivalent model? I'm not.

Yes. I’m confident. I’ll let you know how it goes! I took delivery of a TM3SR+ in November and have a TMYLR on order ETA March. I expect to get more for the M3 than I paid (whether via PX or WBAC). The Y is admittedly an unknown quantity, but I plan to trade that for an eMacan…whenever that will be!
I don’t think the issue is just Covid, more so the knock on effect of chip shortages.

[48k]

FWIW said:

48k said:

The second hand market is nuts right now because of Covid are you genuinely confident you can buy new EV now (that will be delivered in what 6 months time?) run it for however long you are suggesting to keep it that is less than 3 years, and sell it for more than the new equivalent model? I'm not.

Yes. I’m confident. I’ll let you know how it goes! I took delivery of a TM3SR+ in November and have a TMYLR on order ETA March. I expect to get more for the M3 than I paid (whether via PX or WBAC). The Y is admittedly an unknown quantity, but I plan to trade that for an eMacan…whenever that will be!
I don’t think the issue is just Covid, more so the knock on effect of chip shortages.

Sorry, the "you" was figurative, I was assuming the OP is buying new and hasn't bought the car yet. My EV was ordered in July and I took delivery in November, I think lead times are getting longer and I also think the second hand price bubble is going to burst at some point.

[Ken Figenus]

Muzzer79 said:

I don’t see it as “anti-EV bull”

There’s a very plausible theory that, as EV technology marches on so rapidly, today’s EVs will relatively quickly become undesirable or even obsolete as tomorrow’s EVs have longer range and become cheaper due to economies of scale.

That will affect value. I will soon happily be going down the EV route, but I wouldn’t buy one outright at this point in their development.

Tesla... Model S, 2012. Minor increments... Out over 10 years. Solid resale.

[48k]

Ken Figenus said:

Muzzer79 said:

I don’t see it as “anti-EV bull”

There’s a very plausible theory that, as EV technology marches on so rapidly, today’s EVs will relatively quickly become undesirable or even obsolete as tomorrow’s EVs have longer range and become cheaper due to economies of scale.

That will affect value. I will soon happily be going down the EV route, but I wouldn’t buy one outright at this point in their development.

Tesla... Model S, 2012. Minor increments... Out over 10 years. Solid resale.

Personally I wouldn't describe the evolution of the Model S as "minor increments over ten years." Umpteen battery capacity, range, performance and motor upgrades over the years. To me it's the very epitome of how the technology evolves. The Triggers Broom of EVs. I don't think you can even buy the old 60kwh ones any more (the ones that Tesla tried to charge £17K to have the battery replaced)..

[Heres Johnny]

48k said:

Personally I wouldn't describe the evolution of the Model S as "minor increments over ten years." Umpteen battery capacity, range, performance and motor upgrades over the years. To me it's the very epitome of how the technology evolves. The Triggers Broom of EVs. I don't think you can even buy the old 60kwh ones any more (the ones that Tesla tried to charge £17K to have the battery replaced)..

Battery chemistry has changed once and that was back in 2016
Capacity changes were adding more cells
M3 uses a different cell size but similar chemistry
The new LFP packs in rhe M3 are heavier and less tolerant to temperature and cheaper and basically a backward step with the only advantage being it happily charges to 100%
The battery in the latest MS Plaid has lower capacity than the old Performance.

Motors - they’ve had 4 in all that time, the main changes being a switch to a permanent magnet in 2018 and they’re now trying hairpin windings which are less than 3% more efficient but lower in power
Plaid uses 3 motors. 2 rear motors to replace the train derived motor the outgoing performance car used which was unchanged since launch of the P85 in 2013

None of that seems significant to me in 10 years. Changes have been to cooling, a heat pump, suspension and if you look at then, the last 2 were in EVs or ICE with Tesla were just playing catch up.

Edited by Heres Johnny on Monday 3rd January 21:27

[48k]

Heres Johnny said:

48k said:

Personally I wouldn't describe the evolution of the Model S as "minor increments over ten years." Umpteen battery capacity, range, performance and motor upgrades over the years. To me it's the very epitome of how the technology evolves. The Triggers Broom of EVs. I don't think you can even buy the old 60kwh ones any more (the ones that Tesla tried to charge £17K to have the battery replaced)..

Battery chemistry has changed once and that was back in 2016
Capacity changes were adding more cells
M3 uses a different cell size but similar chemistry
The new LFP packs in rhe M3 are heavier and less tolerant to temperature and cheaper and basically a backward step with the only advantage being it happily charges to 100%
The battery in the latest MS Plaid has lower capacity than the old Performance.

Motors - they’ve had 4 in all that time, the main changes being a switch to a permanent magnet in 2018 and they’re now trying hairpin windings which are less than 3% more efficient but lower in power
Plaid uses 3 motors. 2 rear motors to replace the train derived motor the outgoing performance car used which was unchanged since launch of the P85 in 2013

None of that seems significant to me in 10 years. Changes have been to cooling, a heat pump, suspension and if you look at then, the last 2 were in EVs or ICE with Tesla were just playing catch up.

Edited by Heres Johnny on Monday 3rd January 21:27

We'll have to agree to disagree. For example a new motor every 2.5 years is not insignificant to me and just one illustration of how quickly the technology is developing in the EV space. People aren't going to clamour to buy ten year old Model S's when the latest model has evolved so much and in so many ways (just to keep in context and bring it back to the point being discussed which has been cut from the quotes).

[Heres Johnny]

48k said:

We'll have to agree to disagree. For example a new motor every 2.5 years is not insignificant to me and just one illustration of how quickly the technology is developing in the EV space. People aren't going to clamour to buy ten year old Model S's when the latest model has evolved so much and in so many ways (just to keep in context and bring it back to the point being discussed which has been cut from the quotes).

You’re not on message at Tesla, the over the air software updates keep your car up to date on tech, I’ve just explained the battery and motor has hardly evolved and the in some ways are worse than before. The main screen changes every 5 years, not untypical, BMW nav system changes about every 4 years. I’d no more buy a 10 year old Tesla than I would a 10 year old ICE but other than the very earliest cars by a manufacturer who’d hardly built a car before there’s not an awful lot of advancement.

We can agree to disagree, one of us however can point to details and examples. My first Tesla from 2015 had an efficiency of around 300wh/m, the latest cars of a similar size are about the same, that’s progress over 7 years.

[48k]

Heres Johnny said:

48k said:

We'll have to agree to disagree. For example a new motor every 2.5 years is not insignificant to me and just one illustration of how quickly the technology is developing in the EV space. People aren't going to clamour to buy ten year old Model S's when the latest model has evolved so much and in so many ways (just to keep in context and bring it back to the point being discussed which has been cut from the quotes).

You’re not on message at Tesla, the over the air software updates keep your car up to date on tech, I’ve just explained the battery and motor has hardly evolved and the in some ways are worse than before. The main screen changes every 5 years, not untypical, BMW nav system changes about every 4 years. I’d no more buy a 10 year old Tesla than I would a 10 year old ICE but other than the very earliest cars by a manufacturer who’d hardly built a car before there’s not an awful lot of advancement.

We can agree to disagree, one of us however can point to details and examples. My first Tesla from 2015 had an efficiency of around 300wh/m, the latest cars of a similar size are about the same, that’s progress over 7 years.

The quote that was being responded to was that the car has had minor increments in the last ten years which gives it solid resale values. I don't see them as minor increments and that fact that the original versions don't seem to exist on the second hand market any more and the fact that the oldest used examples are less than a third of the price of a new one suggests to me people are not clamouring to buy the older tech when the newer tech is available and that the resale values are only solid for the current generation cars and in this covid+chip shortage bubble that we're in. And the wider quote which has also been cut from the discussion was regarding the pace of development of EV tech it wasn't a Tesla specific point that was being made. So yes we can agree to disagree and yes we have both evidenced our points of view, doesn't make either of us right or wrong it's just opinion.

[Muzzer79]

Ken Figenus said:

Muzzer79 said:

I don’t see it as “anti-EV bull”

There’s a very plausible theory that, as EV technology marches on so rapidly, today’s EVs will relatively quickly become undesirable or even obsolete as tomorrow’s EVs have longer range and become cheaper due to economies of scale.

That will affect value. I will soon happily be going down the EV route, but I wouldn’t buy one outright at this point in their development.

Tesla... Model S, 2012. Minor increments... Out over 10 years. Solid resale.

If you think that the development of EV technology over the coming 10 years will mirror development over the previous 10 years.....well then we'll need to disagree.

10 years ago, Tesla were really the only ones doing this properly on a production level. EVs from 'main' manufacturers were relatively niche.

Now, everyone has skin in the game. Major manufacturers are committing to removing ICE powertrains altogether.

As more people join the development race, development moves faster.

[springfan62]

Battery technology has developed at a rate of about 5% per year over the last ten years.

There is no evidence that there is seismic development about to be announced so I think it's reasonable to expect the above to be maintained gong forward.

The main developments will probably coming in charging infrastructure with more and much faster charging, the more it improves the less dependent we are on range and battery technology.

[Heres Johnny]

springfan62 said:

Battery technology has developed at a rate of about 5% per year over the last ten years.

There is no evidence that there is seismic development about to be announced so I think it's reasonable to expect the above to be maintained gong forward.

The main developments will probably coming in charging infrastructure with more and much faster charging, the more it improves the less dependent we are on range and battery technology.

Can you evidence that? Bigger battery packs yes, but the cells themselves don't seem to be making gains other than maybe in a lab and are not finding their way to production cars. As I mentioned earlier, if anything its going backwards at Tesla, the LFP battery packs they use are larger and heavier for the same capacity than the Lithium Ion they use in for the bigger packs and thats what they're increasingly churning out now. They repackaged the Model S battery pack for improved cooling and fitting some of the charging circuit into the pack and it now has a smaller capacity than the old one. A battery form fact thats unchanged in 5 years has a smaller capacity... by your calculations it should be 25% bigger.

[springfan62]

Heres Johnny said:

springfan62 said:

Battery technology has developed at a rate of about 5% per year over the last ten years.

There is no evidence that there is seismic development about to be announced so I think it's reasonable to expect the above to be maintained gong forward.

The main developments will probably coming in charging infrastructure with more and much faster charging, the more it improves the less dependent we are on range and battery technology.

Can you evidence that? Bigger battery packs yes, but the cells themselves don't seem to be making gains other than maybe in a lab and are not finding their way to production cars. As I mentioned earlier, if anything its going backwards at Tesla, the LFP battery packs they use are larger and heavier for the same capacity than the Lithium Ion they use in for the bigger packs and thats what they're increasingly churning out now. They repackaged the Model S battery pack for improved cooling and fitting some of the charging circuit into the pack and it now has a smaller capacity than the old one. A battery form fact thats unchanged in 5 years has a smaller capacity... by your calculations it should be 25% bigger.

The LFP has some advantages of the previous battery but its probably mainly cost driven in that particular case. We don't now the economics of their decision process to do this, some changes will be driven by economics, so a cheaper battery is as important to them as a higher density one.

[Diderot]

Muzzer79 said:

Ken Figenus said:

Muzzer79 said:

I don’t see it as “anti-EV bull”

There’s a very plausible theory that, as EV technology marches on so rapidly, today’s EVs will relatively quickly become undesirable or even obsolete as tomorrow’s EVs have longer range and become cheaper due to economies of scale.

That will affect value. I will soon happily be going down the EV route, but I wouldn’t buy one outright at this point in their development.

Tesla... Model S, 2012. Minor increments... Out over 10 years. Solid resale.

If you think that the development of EV technology over the coming 10 years will mirror development over the previous 10 years.....well then we'll need to disagree.

10 years ago, Tesla were really the only ones doing this properly on a production level. EVs from 'main' manufacturers were relatively niche.

Now, everyone has skin in the game. Major manufacturers are committing to removing ICE powertrains altogether.

As more people join the development race, development moves faster.

Agree with this. Just look at the past 2 years, and especially, 2021 - all the big players now have a range of EVs and there's more to come this year and next. The game is moving on apace.

[PurpleFox]

springfan62 said:

Heres Johnny said:

With the current fairly glatial depreciation at the moment and the benefits of company owning a EV is the ability to offset the depreciation against tax, and as you either leave the profits invested or pay dividends which are fairly tax efficient, and fiannly if you expense any business miles travelling to the properties where you could pay your self 45p a mile and would only be able to claim 5p if you took a company car, you might need to work on the numbers to ensure its what you want to do.

I didn't bother, any savings through tax were marginal and wiped out by increased costs to administer.

This, plus if you purchase now you will get relief at the current rate of corporation tax but when you sell this could be 19%, 25% or the marginal rate of 26.5%.

I am going to buy my car out of the company before March 2023 otherwise I will be paying 26.5% on the balancing charge on the car.

I am / was of a similar mindset to the OP and wanted to proceed on a new ev as a company car but having just read the above a few times to let it sink in, it's got me thinking....


So, say the company made £50k profit and the director would like a new car.

Scenario a: His LTD would pay 19% tax so £9.5k. The £40k sits in company account. Director cannot withdraw in form of salary or dividends as tax inefficient (other employment). No intention of further investments at the moment.
Buys company car from own funds or leases personally with after tax salary from main income and charges 45ppm when on company business (2000 a year).

Scenario b: company buys ev for £50k and declares a profit = £0 after writing down allowance. No tax due. Director has the taxed income from other employment to spend / invest. Car is sold for £25k after 3 years, company pays tax on £25k at the going rate so £5k ish if rates stay the same.

So over 3 years scenario b saved £4.5k in tax.
Mileage difference is £800 per year adds up to £2400

So overall saving of just £2500 ish? Less if you add the company car BIK tax for the director.

Please tell me I am wrong, I was dead set for scenario b and had convinced myself I was saving a fortune?

It would still be preferable for me as I have no use for the money within the company at the moment but would be a lot sweeter with a decent saving.

[springfan62]

You are missing running costs though which are also tax deductible in the company such tyres, repairs, insurance and non home charging.

The calculation is different for everyone though, there is no simple answer.

[Heres Johnny]

Not many EVs hav3 depreciated 25k in 3 years. They may in the future of course, but redo the maths with say 15k depreciation because that’s the gamble, the lower the depreciation the less benefit there is having the car in the company

[PurpleFox]

Heres Johnny said:

Not many EVs hav3 depreciated 25k in 3 years. They may in the future of course, but redo the maths with say 15k depreciation because that’s the gamble, the lower the depreciation the less benefit there is having the car in the company

Yeah I thought that but I am trying to stack thre figures in favour of buying through thr company.

Plus thre Corp tax could be higher in three years

[oop north]

Corporation tax rate is increasing from April 2023 - 19% on first £50k, 26.5% thereafter to £250k I think

So buy a car now and get relief at 19%, sell in three years and get taxed on the proceeds at 26.5%. Not my idea of fun

[PurpleFox]

oop north said:

Corporation tax rate is increasing from April 2023 - 19% on first £50k, 26.5% thereafter to £250k I think

So buy a car now and get relief at 19%, sell in three years and get taxed on the proceeds at 26.5%. Not my idea of fun

Ouch. I knew it was going up but didn't know the specifics.

Still though, if company is making money and you have no need to reinvest and no desire to draw a salary, how do you enjoy the proceeds?