Limited company purchasing 2nd hand ev
Discussion
mpgrant70 said:
Hi could any accountant members explain the difference from buying a new ev rather than 2 month old one for example I believe the capital allowance is different the car will be purchased by a limited company and used for personal and business use. Thanks
1. If pre-reg with very few miles it can count as new for tax purposes so full capital relief (dependent on percentage business use).2. Why buy nearly new? At the moment it's as expensive - if not more so - than new. Unless you are after something right now.
If being purchased by a company, an EV’s write down has nothing to do with the extent of business v private use.
If ex demo or brand new then 100% initial allowance is given in year of purchase.
If used, then I think it’s an 18% writing down allowance each year. This is actually advantageous in terms of total tax relief with the increase in corporation tax rates from April 2023 (as 100% this year gets you relief at 19% only with final proceeds being taxed at 25% plus, but writing down allowance gets you 19% corp tax rate this year but 25%+ in later years), though it will take longer to get the tax relief.
If ex demo or brand new then 100% initial allowance is given in year of purchase.
If used, then I think it’s an 18% writing down allowance each year. This is actually advantageous in terms of total tax relief with the increase in corporation tax rates from April 2023 (as 100% this year gets you relief at 19% only with final proceeds being taxed at 25% plus, but writing down allowance gets you 19% corp tax rate this year but 25%+ in later years), though it will take longer to get the tax relief.
oop north said:
If being purchased by a company, an EV’s write down has nothing to do with the extent of business v private use.
If ex demo or brand new then 100% initial allowance is given in year of purchase.
If used, then I think it’s an 18% writing down allowance each year. This is actually advantageous in terms of total tax relief with the increase in corporation tax rates from April 2023 (as 100% this year gets you relief at 19% only with final proceeds being taxed at 25% plus, but writing down allowance gets you 19% corp tax rate this year but 25%+ in later years), though it will take longer to get the tax relief.
Yes, sorry for confusion - my mistake. I am a sole trader so was quoting rules for that.If ex demo or brand new then 100% initial allowance is given in year of purchase.
If used, then I think it’s an 18% writing down allowance each year. This is actually advantageous in terms of total tax relief with the increase in corporation tax rates from April 2023 (as 100% this year gets you relief at 19% only with final proceeds being taxed at 25% plus, but writing down allowance gets you 19% corp tax rate this year but 25%+ in later years), though it will take longer to get the tax relief.
I did this in the last tax year knowing it would be better to stagger the write down given the imminent increase in CT rate next year.
Bear in mind these cars generally aren't depreciating much so if you do get 100% write down and tax relief now at 19% and then dispose of the vehicle in a few years time you might conceivably end up paying all that tax back and more because of the increased rate.
Bear in mind these cars generally aren't depreciating much so if you do get 100% write down and tax relief now at 19% and then dispose of the vehicle in a few years time you might conceivably end up paying all that tax back and more because of the increased rate.
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