Help with (bulk) car buying.
Discussion
My wife has just started with a smallish company just as a admin/accounts clerk.
The boss/owner of the company wants to buy 4 pool cars and provide company car each for 2 directors.
He has aked my wife and her boss (Office Manager) to look into it.
Neither my wife or her boss has any experience of purchasing cars for a company before.
I suggested getting in touch with the sales managers of the major local dealers for Ford, vauxhall, Renault etc.. and ask what is the best way to proceed.
The directors cars will probably be Mondeo size highish spec and the pool cars Focus size all doing a fair few miles a year (15k +).
I think its foolish to buy and some kind of fully serviced lease would be a better idea.
They are not a large company but are expanding ATM but investing alot in networks/hardware/upsizing offices etc.. and I think paying out £100k + in one hit wouldn't make financial sense.
Anybody has idea what the best route would be and also the tax side of things?
Thanks
The boss/owner of the company wants to buy 4 pool cars and provide company car each for 2 directors.
He has aked my wife and her boss (Office Manager) to look into it.
Neither my wife or her boss has any experience of purchasing cars for a company before.
I suggested getting in touch with the sales managers of the major local dealers for Ford, vauxhall, Renault etc.. and ask what is the best way to proceed.
The directors cars will probably be Mondeo size highish spec and the pool cars Focus size all doing a fair few miles a year (15k +).
I think its foolish to buy and some kind of fully serviced lease would be a better idea.
They are not a large company but are expanding ATM but investing alot in networks/hardware/upsizing offices etc.. and I think paying out £100k + in one hit wouldn't make financial sense.
Anybody has idea what the best route would be and also the tax side of things?
Thanks
I think they need more guidance. As in types and sizes of cars and potential budget.
Buying has benefits, as you aren't actually spending £xxx, you are simply investing it and you'll get £yyyy in return when you sell them on. The cost to the company is the difference and the vehicles become assets while owned.
So what is needed to be done, is see how much a lease car would including all costs over a period of time, maybe multiple time frames and compare to buying, running and potentially replacing.
I suspect there might be good tax reasons to buy also, as you can roll over some profit as reinvestment.
I might have got this all wrong though.
Buying has benefits, as you aren't actually spending £xxx, you are simply investing it and you'll get £yyyy in return when you sell them on. The cost to the company is the difference and the vehicles become assets while owned.
So what is needed to be done, is see how much a lease car would including all costs over a period of time, maybe multiple time frames and compare to buying, running and potentially replacing.
I suspect there might be good tax reasons to buy also, as you can roll over some profit as reinvestment.
I might have got this all wrong though.
I'm the training manager for a large motor dealer group. If you want to email me off forum (
) I am more than happy to give you some more detailed advice and, if you so desire, point you in the right direction. There is an awful lot to consider here, so I will give some general guidance.
Firstly, decide what cars will fulfil the role, at the end of the day saving £30 a month is no good if it can't/won't do what you need it to do.
The decide on how to acquire the cars. First question is, is the business VAT registered. If yes, it opens the possibility of leasing a car and claiming some of the VAT back. If the car is purchased through cash or loan, then the company can't claim back any VAT, other than on running costs like service and maintenance.
Company Car tax is now paid on the emissions of the car, broadly speaking the higher the emissions, the higher the BIK is.
For acquisition, the first question to ask is do they want the cars as an asset of the business (own them), or just to use a car(lease them)?
For the company and its tax purposes, leases often work out more efficient, but ensure any car purchased/leased has less than 160 g/km (I think it is still 160, may need to double check that).
If they choose to own the car, then they can claim a 20% write down depreciating allowance, on the depreciating balance(assuming car is <160 g/km). If they lease the car they can offset the whole rental as an expense.
If they buy a very low emissions car (sub 110 g/km) they can offset all the purchase price as a write down allowance in the first year. Naturally, when the cars are disposed of then this is put back in as a profit but does provide a very useful tax break in year 1 of ownership
These effectively reduce the profit of the company thus corporation tax.
If the business has not been going very long, the directors may need to personally act as guarantors of the loans/lease if accounts haven't been produced/don't look too healthy. Deposits are often useful as this reduces the risk for the finance house.
As I say, this is a broad brush answer, I am not a tax expert. More than happy to help out if you want to know more.
Ian
) I am more than happy to give you some more detailed advice and, if you so desire, point you in the right direction. There is an awful lot to consider here, so I will give some general guidance.Firstly, decide what cars will fulfil the role, at the end of the day saving £30 a month is no good if it can't/won't do what you need it to do.
The decide on how to acquire the cars. First question is, is the business VAT registered. If yes, it opens the possibility of leasing a car and claiming some of the VAT back. If the car is purchased through cash or loan, then the company can't claim back any VAT, other than on running costs like service and maintenance.
Company Car tax is now paid on the emissions of the car, broadly speaking the higher the emissions, the higher the BIK is.
For acquisition, the first question to ask is do they want the cars as an asset of the business (own them), or just to use a car(lease them)?
For the company and its tax purposes, leases often work out more efficient, but ensure any car purchased/leased has less than 160 g/km (I think it is still 160, may need to double check that).
If they choose to own the car, then they can claim a 20% write down depreciating allowance, on the depreciating balance(assuming car is <160 g/km). If they lease the car they can offset the whole rental as an expense.
If they buy a very low emissions car (sub 110 g/km) they can offset all the purchase price as a write down allowance in the first year. Naturally, when the cars are disposed of then this is put back in as a profit but does provide a very useful tax break in year 1 of ownership
These effectively reduce the profit of the company thus corporation tax.
If the business has not been going very long, the directors may need to personally act as guarantors of the loans/lease if accounts haven't been produced/don't look too healthy. Deposits are often useful as this reduces the risk for the finance house.
As I say, this is a broad brush answer, I am not a tax expert. More than happy to help out if you want to know more.
Ian
Edited by ZZ on Tuesday 10th May 14:30
Edited by marshalla on Monday 19th September 22:18
Thanks Ian. As I thought initially its a minefield and one which the companies accountants will be able to help and give advice.
The company is tax registered, it turns over £2m + per annum and has been going 15+ years so established.
Thing is the boss just makes these kind of decisions on a whim without fully thinking about all the details. To be fair its not his job to sort the details.
I will let my wife know and she/I may contact you for more information.
The company is tax registered, it turns over £2m + per annum and has been going 15+ years so established.
Thing is the boss just makes these kind of decisions on a whim without fully thinking about all the details. To be fair its not his job to sort the details.
I will let my wife know and she/I may contact you for more information.
ZZ said:
I'm the training manager for a large motor dealer group. If you want to email me off forum () I am more than happy to give you some more detailed advice and, if you so desire, point you in the right direction. There is an awful lot to consider here, so I will give some general guidance.
Firstly, decide what cars will fulfil the role, at the end of the day saving £30 a month is no good if it can't/won't do what you need it to do.
The decide on how to acquire the cars. First question is, is the business VAT registered. If yes, it opens the possibility of leasing a car and claiming some of the VAT back. If the car is purchased through cash or loan, then the company can't claim back any VAT, other than on running costs like service and maintenance.
Company Car tax is now paid on the emissions of the car, broadly speaking the higher the emissions, the higher the BIK is.
For acquisition, the first question to ask is do they want the cars as an asset of the business (own them), or just to use a car(lease them)?
For the company and its tax purposes, leases often work out more efficient, but ensure any car purchased/leased has less than 160 g/km (I think it is still 160, may need to double check that).
If they choose to own the car, then they can claim a 20% write down depreciating allowance, on the depreciating balance(assuming car is <160 g/km). If they lease the car they can offset the whole rental as an expense.
If they buy a very low emissions car (sub 110 g/km) they can offset all the purchase price as a write down allowance in the first year. Naturally, when the cars are disposed of then this is put back in as a profit but does provide a very useful tax break in year 1 of ownership
These effectively reduce the profit of the company thus corporation tax.
If the business has not been going very long, the directors may need to personally act as guarantors of the loans/lease if accounts haven't been produced/don't look too healthy. Deposits are often useful as this reduces the risk for the finance house.
As I say, this is a broad brush answer, I am not a tax expert. More than happy to help out if you want to know more.
Ian
Top answer ZZ ) I am more than happy to give you some more detailed advice and, if you so desire, point you in the right direction. There is an awful lot to consider here, so I will give some general guidance.Firstly, decide what cars will fulfil the role, at the end of the day saving £30 a month is no good if it can't/won't do what you need it to do.
The decide on how to acquire the cars. First question is, is the business VAT registered. If yes, it opens the possibility of leasing a car and claiming some of the VAT back. If the car is purchased through cash or loan, then the company can't claim back any VAT, other than on running costs like service and maintenance.
Company Car tax is now paid on the emissions of the car, broadly speaking the higher the emissions, the higher the BIK is.
For acquisition, the first question to ask is do they want the cars as an asset of the business (own them), or just to use a car(lease them)?
For the company and its tax purposes, leases often work out more efficient, but ensure any car purchased/leased has less than 160 g/km (I think it is still 160, may need to double check that).
If they choose to own the car, then they can claim a 20% write down depreciating allowance, on the depreciating balance(assuming car is <160 g/km). If they lease the car they can offset the whole rental as an expense.
If they buy a very low emissions car (sub 110 g/km) they can offset all the purchase price as a write down allowance in the first year. Naturally, when the cars are disposed of then this is put back in as a profit but does provide a very useful tax break in year 1 of ownership
These effectively reduce the profit of the company thus corporation tax.
If the business has not been going very long, the directors may need to personally act as guarantors of the loans/lease if accounts haven't been produced/don't look too healthy. Deposits are often useful as this reduces the risk for the finance house.
As I say, this is a broad brush answer, I am not a tax expert. More than happy to help out if you want to know more.
Ian
Edited by ZZ on Tuesday 10th May 14:30
Edited by marshalla on Monday 19th September 22:18
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