Impact on corporation tax of a company car

[magic360]

I have a quick question which I am hoping someone can help with. This isn’t a question about BiK which I think I understand.

If my ltd company is projecting a potential corporation tax bill at the end of this financial year of c£60k what is the impact of buying an electric car through the company for say £70k ? Does that mean no tax is due or something different ?

Thanks in advance.

[trickywoo]

Tax of £60k means profit around £300k.

Buying electric car at £70k means £230k profit and £46k bill.

All approximately and there will be a vat element to consider also.

[Lim]

No vat saving ( I think) if whole capital allowance taken in first year? Unless you are leasing.

If you sell the car you will need to add the revenue back on. If corp tax and BIK goes up in mean time could be awkward.

Still possibly worth doing but something to factor in.

Edited by Lim on Sunday 28th February 07:31

[essayer]

Can’t you use first year allowance to reduce CT by whatever percentage of the list price you do as business mileage?
So £70k car used 50% business/personal takes £35k off the CT (but does add some back when you sell it?)

e: no this is nonsense ignore me

Edited by essayer on Sunday 28th February 12:59

[trickywoo]

essayer said:

Can’t you use first year allowance to reduce CT by whatever percentage of the list price you do as business mileage?
So £70k car used 50% business/personal takes £35k off the CT (but does add some back when you sell it?)

Not sure I follow. Electric cars are currently 100% capital allowance so how does a 50/50 arrangement get £35k off the CT of £60k with a taxable profit of £300k?

Edited by trickywoo on Sunday 28th February 07:02

[magic360]

Thanks @trickywoo I think you have answered my question.

[essayer]

trickywoo said:

Not sure I follow. Electric cars are currently 100% capital allowance so how does a 50/50 arrangement get £35k off the CT of £60k with a taxable profit of £300k?

Edited by trickywoo on Sunday 28th February 07:02

You’re quite right, reduce the profit not the tax due on it (I wish!)