Ltd Co Contractor - Buying myself a Company Car
Ltd Co Contractor - Buying myself a Company Car
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ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Hello

I'm a contractor with a ltd company - vat registered. I drive around 600 miles per week for work. Currently I am planning to charge the business 45p / 25p for the miles driven. I am already over the 45p threshold and now thinking that 25p barely covers my costs.

So I've decided to buy a new / nearly new car which is vat qualifying. My intention is to buy this through my business and charge all the fuel etc through this and then charge myself BIK.

Is this a good idea?

I dont have an accountant yet to tell me it is / it isn't. I really like the idea of getting a new car with warranty etc. Right now I am buying cheap smokers but these need regular repairs which is difficult for me when I need to be driving constantly. So I have 2 smokers which I rotate requiring 2 tax discs and 2 insurance premiums.

sumo69

2,164 posts

250 months

Tuesday 10th September 2013
quotequote all
Nobody can advise you of the costs involved without knowing what car you intend to buy as much depends on its CO2 rating.

David

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Company car tax costs for BMW 1-Series Hatchback (11 on) 125d M Sport (Professional Media) 5d Step Auto


Assuming 20% tax bracket this says 100 per month for the car and 59 for the fuel.


http://www.parkers.co.uk/company-cars/tax-calculat...

ringram

14,702 posts

278 months

Tuesday 10th September 2013
quotequote all
If you get an LCV its a flat rate BIK not co2 related.
Look at VW Amarok or whatever its called and other ute type stuff. You could also get a fiesta van if you really wanted etc..
Its also 100% able to be written off under the AIA scheme (if its load capacity is 1T) so doesnt sit depreciating on your books.
Plus VAT is claimable etc, etc all nice plus points.

(ie) Get a 4 seater Amarok pay the flat rate BIK and use it as much as you like for work and private use. All tax free. Amen.

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
You need an accountant - urgently.

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Eric Mc said:
You need an accountant - urgently.
And if I don't have one I cant buy any cars or vans?

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
No smile

Or at least, if you do go ahead and buy without properly going through all the possible tax and PAYE implications, it could work out very expensive for you.

That's all.

At the end of the day, it's your company and your decision.

And if you don't mind paying tax unnecessarily - then by all means go ahead.

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Eric Mc said:
No smile

Or at least, if you do go ahead and buy without properly going through all the possible tax and PAYE implications, it could work out very expensive for you.

That's all.

At the end of the day, it's your company and your decision.

And if you don't mind paying tax unnecessarily - then by all means go ahead.
What would I expect to pay ball park for an accountant?

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
How long is a piece of string?

With a limited company and all the requirements that go with that - I would suggest a starting fee in the order of £600 upwards.

In my opinion and experience, a non accountant will end up in a terrible (and probably expensive and worrying) mess if they try to look after their company without professional assistance.

Shirt587

360 posts

165 months

Tuesday 10th September 2013
quotequote all
As you are finding with your current cars, buy cheap buy twice.

Accountants are the same. smile

Napper

120 posts

242 months

Tuesday 10th September 2013
quotequote all
ATM said:
What would I expect to pay ball park for an accountant?
I pay £600 / year.
Worth every penny!

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
ringram said:
If you get an LCV its a flat rate BIK not co2 related.
Look at VW Amarok or whatever its called and other ute type stuff. You could also get a fiesta van if you really wanted etc..
Its also 100% able to be written off under the AIA scheme (if its load capacity is 1T) so doesnt sit depreciating on your books.
Plus VAT is claimable etc, etc all nice plus points.

(ie) Get a 4 seater Amarok pay the flat rate BIK and use it as much as you like for work and private use. All tax free. Amen.
I'm not really feeling the Anorak. But I could get into the VW scene with a Transporter or I also quite like the look of the Vito Sportex. So these qualify for - cough cough - free because they're vans even though my business has no need for a van?

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
The better Capital Allowances and Benefit in Kind treatment relates to the vehicle - not whether the company NEEDS the vehicle.

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Eric Mc said:
The better Capital Allowances and Benefit in Kind treatment relates to the vehicle - not whether the company NEEDS the vehicle.
So in theory the business can buy several vans even if there is no need for these?

I could easily make some good money renting these out to cash paying s.

Terminator X

20,864 posts

234 months

Tuesday 10th September 2013
quotequote all
FYI my accountant advised against buying a car through the business (small Ltd Co over here too) instead advising to do the 45ppm thing. Most annoying as I wanted a new C63 wink

TX.

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
ATM said:
Eric Mc said:
The better Capital Allowances and Benefit in Kind treatment relates to the vehicle - not whether the company NEEDS the vehicle.
So in theory the business can buy several vans even if there is no need for these?

I could easily make some good money renting these out to cash paying s.
Nothing to stop your limited company becoming a van rental company if it wants to.

Obviously, you would need to know the ins and outs of that type of business and the legal aspects of becoming a lessor.

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Terminator X said:
FYI my accountant advised against buying a car through the business (small Ltd Co over here too) instead advising to do the 45ppm thing. Most annoying as I wanted a new C63 wink

TX.
So I did this myself but then after 10000 miles you need to switch to 25p. Which doesn't really cover my costs.

Eric Mc

125,776 posts

295 months

Tuesday 10th September 2013
quotequote all
Using the company to buy the car will create a taxable Benefit in Kind that YOU need to pay through the PAYE system. It will also create an additional Class 1A NIC contribution payable by the company.

Obviously, the level of BIK involved will depend on the vehicle. and other factors associated with the vehicle, such as who pays for its fuel.

In either case, the company will now have an obligation to file a PAYE P11D Benefits in Kind form each year. This is something you may not have had to do up to now.

If the vehicle is purchased, either outright or through some sort of hire purchase or loan agreement, the company can obtain tax relief on the capital cost of the vehicle through the Capital Allowances system - but the amount of allowance claimed can range from very poor to excellent, depending on the class of vehicle purchased.
If the vehicle is leased, then the company claims different types of tax relief.

Terminator X

20,864 posts

234 months

Tuesday 10th September 2013
quotequote all
ATM said:
Terminator X said:
FYI my accountant advised against buying a car through the business (small Ltd Co over here too) instead advising to do the 45ppm thing. Most annoying as I wanted a new C63 wink

TX.
So I did this myself but then after 10000 miles you need to switch to 25p. Which doesn't really cover my costs.
Really? 10k miles at 45p then 10k miles at 25p = £7k ... not too shabby per year + it's tax free! Assuming 30mpg the fuel cost is about £4k. If you got 50mpg via a diesel then fuel would only be £2.5k.

TX.

ATM

Original Poster:

21,473 posts

249 months

Tuesday 10th September 2013
quotequote all
Terminator X said:
ATM said:
Terminator X said:
FYI my accountant advised against buying a car through the business (small Ltd Co over here too) instead advising to do the 45ppm thing. Most annoying as I wanted a new C63 wink

TX.
So I did this myself but then after 10000 miles you need to switch to 25p. Which doesn't really cover my costs.
Really? 10k miles at 45p then 10k miles at 25p = £7k ... not too shabby per year + it's tax free! Assuming 30mpg the fuel cost is about £4k. If you got 50mpg via a diesel then fuel would only be £2.5k.

TX.
So the 45p stuff pays well. Park the 4500 from this.

Now think about the next 10000 miles for 2500. This is poor.

Now do another 10000 @ 25p and again this is poor.

Even if you add up the lot its only 9500 for 30000 miles. Makes the average more like 32p. At 40mpg its hard to make any profit from this.