Did First Year Capital Allowance get extended? ££££s!!
Discussion
Just been talking about this at work... makes a huge difference to people who run their own business...
For those that don't know about this scheme - there are certain plant and equipment purchases that if they are energy saving you can write off the whole amount against your Corporation tax in the year of purchase. EVs used to be on the list but appear to have disappeared.
Take this as an example... a you make £50,000 profit in 2013/14. You can Pay corporation tax of 20% on that - £10,000 and take the rest as a dividend. £40,000.
OR Instead you buy an i3 in the company (with the £5,000 grant taking the price to £25,000). You can claim the whole cost of the vehicle against your CT - effectively leaving your net tax due as £0. You get the i3 for a net cost of £15k when tax breaks are taken into account. and that's out of company moeny,. not personal money. So you haven't paid income tax to get that moeny to spend. Obviously BIK then kicks in, but on an i3 it's less than £800 a year IIRC.
Better still - if you made £125k profit and were due to pay £25,000 corporation tax, you effectively get the i3 as a free gift from HMRC.
IIRC it was going to be dropped in 2013 but I've found news articles saying there was a proposal to extend it to 2015, and some that the budget saying it was extended till 2018. All well and good, but I've been on HMRCs website and can't find any mention of EVs in the First Year allowances pages. Unless it says so on there, I'm less inclined to believe this once extraordinary tax break has been continued.
Have any of you that have been buying them since March 2013 been able to claim FYA?
For those that don't know about this scheme - there are certain plant and equipment purchases that if they are energy saving you can write off the whole amount against your Corporation tax in the year of purchase. EVs used to be on the list but appear to have disappeared.
Take this as an example... a you make £50,000 profit in 2013/14. You can Pay corporation tax of 20% on that - £10,000 and take the rest as a dividend. £40,000.
OR Instead you buy an i3 in the company (with the £5,000 grant taking the price to £25,000). You can claim the whole cost of the vehicle against your CT - effectively leaving your net tax due as £0. You get the i3 for a net cost of £15k when tax breaks are taken into account. and that's out of company moeny,. not personal money. So you haven't paid income tax to get that moeny to spend. Obviously BIK then kicks in, but on an i3 it's less than £800 a year IIRC.
Better still - if you made £125k profit and were due to pay £25,000 corporation tax, you effectively get the i3 as a free gift from HMRC.
IIRC it was going to be dropped in 2013 but I've found news articles saying there was a proposal to extend it to 2015, and some that the budget saying it was extended till 2018. All well and good, but I've been on HMRCs website and can't find any mention of EVs in the First Year allowances pages. Unless it says so on there, I'm less inclined to believe this once extraordinary tax break has been continued.
Have any of you that have been buying them since March 2013 been able to claim FYA?
TransverseTight said:
Better still - if you made £125k profit and were due to pay £25,000 corporation tax, you effectively get the i3 as a free gift from HMRC.
lol, if only.Here's a link with a couple of examples showing how it works
http://www.hmrc.gov.uk/capital-allowances/plant.ht...
Aha... You got me too re read something I read earlier. This time I spotted this bit...
<quote>110g/km or less (but note that the threshold will be reduced to 95 g/km from 1/6 April 2013 (subject to legislation). If you buy a new, unused car you can claim up to 100 per cent allowance in the accounting period when it was bought, the balance (which may be nil) goes into the main pool in the next year. For detailed guidance, see the guide First-year allowances: the basics<end quote>
The examples underneath show what happens with a normal car where you get to write off 8% per year for 100% business use. The thing with First year allowance is that 8% becomes 100%. Ill be happy to keep it purely business use too. And have a xfr for the weekends
Still I think I need to ring HMRC. If it still stands I'll get an order in as my lease runs out next Jan.
I might even be able to get a tesla at this rate if I can survive on Lidl baked beans for a year and stop taking dividends.
<quote>110g/km or less (but note that the threshold will be reduced to 95 g/km from 1/6 April 2013 (subject to legislation). If you buy a new, unused car you can claim up to 100 per cent allowance in the accounting period when it was bought, the balance (which may be nil) goes into the main pool in the next year. For detailed guidance, see the guide First-year allowances: the basics<end quote>
The examples underneath show what happens with a normal car where you get to write off 8% per year for 100% business use. The thing with First year allowance is that 8% becomes 100%. Ill be happy to keep it purely business use too. And have a xfr for the weekends
Still I think I need to ring HMRC. If it still stands I'll get an order in as my lease runs out next Jan. I might even be able to get a tesla at this rate if I can survive on Lidl baked beans for a year and stop taking dividends.
So you've sussed that the benefit is nowhere near as large as you first thought ? I'm not sure from your post. If not, here's another link with some more examples, specific to low emission vehicles.
http://www.myersclark.co.uk/sites/www.myersclark.c...
I've no affiliation to the firm, just saw the pdf posted somewhere recently (maybe here ?).
I'd call your accountant before HMRC, there's quite a lot to be considered but it's definitely worth looking into if you own a LTD company.
http://www.myersclark.co.uk/sites/www.myersclark.c...
I've no affiliation to the firm, just saw the pdf posted somewhere recently (maybe here ?).
I'd call your accountant before HMRC, there's quite a lot to be considered but it's definitely worth looking into if you own a LTD company.
mids said:
So you've sussed that the benefit is nowhere near as large as you first thought ? I'm not sure from your post. If not, here's another link with some more examples, specific to low emission vehicles.
http://www.myersclark.co.uk/sites/www.myersclark.c...
I've no affiliation to the firm, just saw the pdf posted somewhere recently (maybe here ?).
I'd call your accountant before HMRC, there's quite a lot to be considered but it's definitely worth looking into if you own a LTD company.
Yeah, but it's all a huge saving. Back to that theoretical £50k profit. You deduct the £25k cost of the car (afyer 5k grant) so end up with CT on £25k to pay instead of 50k. Ie £5k tax bill down from £10k and the other £5k off the cars price. So its cost £20k. Not £30. Worked out the bik is £0 this year and £300 in 2015 2016. Works out about £2,600 a year if it retains a conservative 40% of list. Add £360 for electric, Which I can get lower as the place I Park has free EV charging and that was based on worse case peak rate charging http://www.myersclark.co.uk/sites/www.myersclark.c...
I've no affiliation to the firm, just saw the pdf posted somewhere recently (maybe here ?).
I'd call your accountant before HMRC, there's quite a lot to be considered but it's definitely worth looking into if you own a LTD company.
. £300 on my personal tax bill. Could be the cheapest new car I've owned! As long as I don't need to do more than 90 miles a day. Which I never have in 22 years. 
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