Electric Cars - PCP v Contract Hire - WDA - best way?
Discussion
Hello all,
I am sure this has been discussed before however after searching hard I can't seem to find any results with PH.
My Porsche Taycan has arrived in the UK and is ready for delivery (£100k after the plug in grant of £3500 - yes it is eligible as the dealer had it registered with the govt portal before the budget changed things).
What is the best way to finance this car to take advantage of the WDA for electric cars and any other tax advantages?
PCP v HP v Contract hire. I can't find any easy to understand information on this.
I understand with contract hire you can reclaim 50% of the VAT on payments. - Company is basically renting the car.
On PCP there is no VAT reclaimable however you can claim back the yearly PCP payments as WDA - correct (what about the deposit?) - Company owns the car - have to pay back the corporation tax on the proceeds of the sale price of the car whenever the company sells it?
HP - you can claim the full WDA against this years corporation tax - so on a £100k car that would be £19k on a £100k car - correct?
Whats the best way to go around this and take advantage whilst electric cars are favourable to the government! I know about the 0% BIK bit.
My accountant tells me PCP or HP are both the best ways to go around this (HP is better if I can afford the higher payments as WDA is all in year 1). Wanted the PH collectives views as a lot of useful info always on these forums and no harm in a second opinion.
Thank you
I am sure this has been discussed before however after searching hard I can't seem to find any results with PH.
My Porsche Taycan has arrived in the UK and is ready for delivery (£100k after the plug in grant of £3500 - yes it is eligible as the dealer had it registered with the govt portal before the budget changed things).
What is the best way to finance this car to take advantage of the WDA for electric cars and any other tax advantages?
PCP v HP v Contract hire. I can't find any easy to understand information on this.
I understand with contract hire you can reclaim 50% of the VAT on payments. - Company is basically renting the car.
On PCP there is no VAT reclaimable however you can claim back the yearly PCP payments as WDA - correct (what about the deposit?) - Company owns the car - have to pay back the corporation tax on the proceeds of the sale price of the car whenever the company sells it?
HP - you can claim the full WDA against this years corporation tax - so on a £100k car that would be £19k on a £100k car - correct?
Whats the best way to go around this and take advantage whilst electric cars are favourable to the government! I know about the 0% BIK bit.
My accountant tells me PCP or HP are both the best ways to go around this (HP is better if I can afford the higher payments as WDA is all in year 1). Wanted the PH collectives views as a lot of useful info always on these forums and no harm in a second opinion.
Thank you
Edited by PrancingHorses on Friday 20th March 13:50
He's kinda right though. Besides, the EV forum probably isn't the best place to ask. Yes it's an electric car, but that doesn't make EV owners experts on tax, finance, and accountancy. There's a finance forum under Pie and Piston, you might get a more sensible/helpful/authoritative response there?
Well i am an accountant. I think the benefit of buying outright to get 100% WDA is overstated as benefit is timing only - you have to pay CT on full disposal proceeds. Contract hire is better financially I think with 50% vat recovery (an 8.33% discount)
However if you have spare cash in business doing nothing you can avoid the interest element costs of contract hire by buying outright. And you have more flexibility in when to dispose - not tied to fixed period if buy outright
I have seen it said that some PCPs don’t actually get you the 100% write down in yr one because they end up being defined as finance leases - don’t know how true that is or how common as I am not a tax specialist
However if you have spare cash in business doing nothing you can avoid the interest element costs of contract hire by buying outright. And you have more flexibility in when to dispose - not tied to fixed period if buy outright
I have seen it said that some PCPs don’t actually get you the 100% write down in yr one because they end up being defined as finance leases - don’t know how true that is or how common as I am not a tax specialist
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