PCP VAT
Author
Discussion

jamoor

Original Poster:

14,506 posts

245 months

Tuesday 30th July 2019
quotequote all
I am looking to potentially PCP a Tesla Model 3

It's essentially a Deposit + Monthly Payments + Balloon payment.


I want the business to purchase the car and make the monthly payments, I will sacrifice my salary to pay for the car and in turn 0% BIK.

Am I right in assuming that the deposit, monthly payment and the balloon payment all will be VAT reclaimable in the normal way?


Insurancejon

4,098 posts

276 months

Wednesday 31st July 2019
quotequote all
put the finance aside. you would just reclaim the vat as you would on any car purchase for the business.

I got a 100% of the vat back on a hummer limo once, even though it was financed, however the caveat is that there was no personal use, so I guess it will be proportional

48k

17,529 posts

178 months

Wednesday 31st July 2019
quotequote all
VAT treatment of PCP contracts is changing (or has changed I can't remember). Something to do with the fact that because the overwhelming majority of people never pay the final payment (when I worked at VWFS it was something like 90%), HMRC have reclassified PCP contracts as services for supply, instead of a purchase transaction. Which in turn changes how VAT is applied to the payments.

Caveat : I am not an accountant, get advice from your accountant.

Aside from all that, PCP is a consumer product you may have trouble actually taking out a PCP in the name of the company and infact a business lease may work out cheaper.

Caveat again: I am not an accountant, get advice from your accountant.

smile

bristolbaron

5,383 posts

242 months

Wednesday 31st July 2019
quotequote all
PCP - personal contract plan. You’d need to check both end (Tesla & Employer) if they can put a PCP through the business, it’s unlikely.

R.Sole

12,241 posts

236 months

Wednesday 31st July 2019
quotequote all
jamoor said:
I am looking to potentially PCP a Tesla Model 3

It's essentially a Deposit + Monthly Payments + Balloon payment.


I want the business to purchase the car and make the monthly payments, I will sacrifice my salary to pay for the car and in turn 0% BIK.

Am I right in assuming that the deposit, monthly payment and the balloon payment all will be VAT reclaimable in the normal way?
PCP monthly payments can not be paid out of a buisiness account.
Also I don’t think VAT will be reclaimable on a car that is purchased but 50% of the VAT can be reclaimed!
An accountant will be far more informed though.

Edited by R.Sole on Thursday 1st August 07:24


Edited by R.Sole on Thursday 1st August 11:13

Insurancejon

4,098 posts

276 months

Wednesday 31st July 2019
quotequote all
But don’t despair. Lombard will business car finance with a balloon, it’s just the balloon won’t be a guaranteed hand back value

R.Sole

12,241 posts

236 months

Thursday 1st August 2019
quotequote all
jamoor said:
I am looking to potentially PCP a Tesla Model 3

It's essentially a Deposit + Monthly Payments + Balloon payment.


I want the business to purchase the car and make the monthly payments, I will sacrifice my salary to pay for the car and in turn 0% BIK.

Am I right in assuming that the deposit, monthly payment and the balloon payment all will be VAT reclaimable in the normal way?
No.

zoomy

84 posts

185 months

Thursday 1st August 2019
quotequote all
In case your not aware BIC on a Tesla for next year is 0.
Then 1% 2021

Contract hire it (50% VAT reclaimable) and have it as a company car?
Perfect solution.

jamoor

Original Poster:

14,506 posts

245 months

Thursday 1st August 2019
quotequote all
zoomy said:
In case your not aware BIC on a Tesla for next year is 0.
Then 1% 2021

Contract hire it (50% VAT reclaimable) and have it as a company car?
Perfect solution.
Of course I am aware, hence doing it biggrin

No need to pay for fuel, charge it at work etc. I am pretty sure Tesla sales will explode in the next couple of years when company car owners cotton onto this.

shopper150

1,583 posts

224 months

Saturday 3rd August 2019
quotequote all
jamoor said:
zoomy said:
In case your not aware BIC on a Tesla for next year is 0.
Then 1% 2021

Contract hire it (50% VAT reclaimable) and have it as a company car?
Perfect solution.
Of course I am aware, hence doing it biggrin

No need to pay for fuel, charge it at work etc. I am pretty sure Tesla sales will explode in the next couple of years when company car owners cotton onto this.
It’s been like this for 3-4 years?

Griffgrog

740 posts

276 months

Saturday 3rd August 2019
quotequote all
shopper150 said:
jamoor said:
zoomy said:
In case your not aware BIC on a Tesla for next year is 0.
Then 1% 2021

Contract hire it (50% VAT reclaimable) and have it as a company car?
Perfect solution.
Of course I am aware, hence doing it biggrin

No need to pay for fuel, charge it at work etc. I am pretty sure Tesla sales will explode in the next couple of years when company car owners cotton onto this.
It’s been like this for 3-4 years?
Are you saying that the Benefit In Kind rate of a tesla is zero? Ie no tax to pay at all?

jamoor

Original Poster:

14,506 posts

245 months

Saturday 3rd August 2019
quotequote all
Griffgrog said:
Are you saying that the Benefit In Kind rate of a tesla is zero? Ie no tax to pay at all?
Yes -

This situation will be resolved from April 6th 2020 when the new lower rates become effective (all BEVs will pay no company car tax in 2020-21, just 1% in 2021-22 and 2% in 2022-23)

Strike the iron while it's hot imo.

jamoor

Original Poster:

14,506 posts

245 months

Saturday 3rd August 2019
quotequote all
shopper150 said:
It’s been like this for 3-4 years?
AFAIK the BIK hasn't ever been zero?

SOL111

627 posts

162 months

Sunday 4th August 2019
quotequote all
I've purchased an EV through the business via PCP. My accountant was fine with it, as we're BMW finance.

The vat treatment greatly depends on the use of the car. If it's a taxi or some other business where the car is key then the vat is reclaimable. If, like me, you use the car to get to/from client sites and some personal then you can't claim vat.

The guidelines are readily available on the gov website so please check for specifics.