BUYING AND RUNNING CLASSIC CAR AS COMPANY CAR

[POORCARDEALER]

Need some advice as the advice I have got is conflicting.


Wife owns and runs a limited company, she is sole director. She currently runs her own privatly bought car and claims 40 p a mile back.

Company has large cash surplus, if she spends some of it on a classic car as her company car what would her tax liabilty be? Is it based on original purchase price etc??

Thanks in advance

[Simpo Two]

Like your thinking - if you're lucky a 1928 Model-T Ford would be taxed on $290...

[ringram]

Interesting concept! I like it!
Will be watching the thread with interest.

From HMRC site

"For cars first registered before 1 January 1998 the benefit depends only on engine size. It does not depend on the CO2 emissions figure, even if the car has one."

Have a play here. Looks like its probably based on purchase price. http://cccfcalculator.hmrc.gov.uk/CCF0.aspx

Edited by ringram on Sunday 8th August 23:05

[POORCARDEALER]

Yes I have been on the HMRC website and had a look, but i am still confused by it.....sure I read in a magazine it was a very cost effective way (tax wise) of running an interesting car through your company....now thinking maybe it once was but now isnt!!

[plasticpig]

You need to buy an old car and not a classic car. HMRC define a classic car as over 15 years old and worth more than £15K at current market value. If you buy an old car at a market value of less than £15K then it is taxed on the original purchase price.

So to be tax efficient you need to choose your car with care. For example you an get a decent Jensen CV8 for less than £15K and you would be taxed on the original price of £3861. You could get a stunning Daimler V8 for £14K and you would be taxed on the original price of £1768.

[Four Cofffee]

I am assuming that as a business asset it would get some capital allowances, but also capital gains if it went up in value.

I have a 2000 Lotus Elise as a company car but it gets hammered more than perhaps it should by the original purchase price but we have had some depreciation allowed. I also SORN each winter it so I only pay 5 or 6 months company car tax.

[Greenie]

Couple of threads for you to check out

http://www.pistonheads.com/gassing/topic.asp?t=221...

http://www.pistonheads.com/gassing/topic.asp?h=0&a... classic car upto £15K&mid=31723

[DonkeyApple]

Out of interest, how would it work if you bought a turd for under £15k and the company then invested £30k in a restoration?

[plasticpig]

DonkeyApple said:

Out of interest, how would it work if you bought a turd for under £15k and the company then invested £30k in a restoration?

If the £30k spent takes the cars market value over £15K then the car is taxed on the current market value.

[DonkeyApple]

plasticpig said:

DonkeyApple said:

Out of interest, how would it work if you bought a turd for under £15k and the company then invested £30k in a restoration?

If the £30k spent takes the cars market value over £15K then the car is taxed on the current market value.

So absolutely fine with an Allegro then?

[Lefty]

I must admit, I thought the rule was "15k purchase price", regardless of market value?

Anyway, assuming one were to go down this route with, say, a 60's Elan, are all running/maintenance/tuning costs tax deductable?

[MitchT]

Just been searching for information about running older cars as a company car (purely out of idle curiosity) and found this thread.

I get the impression that, if you run a classic that’s worth less than £15k, you pay tax on 35% of the original purchase price. But what if it’s worth more than £15k? Based on what’s written above I get the impression that you pay tax on 35% of its current market value, for example…

Ferrari 355
’97 ‘P’ reg
worth £40k
35% = £14k
tax at 40% = £5,600 / tax at 20% = £2,800.
Am I right?

Also, what if you have an older car that’s less than 15 years old and therefore not deemed a ‘classic’ in the eyes of HMRC, but is out of production? A ’99 ‘V’ reg E36 BMW M3, for example? What value are the calculations based on then?

[strattonkillick]

If the car is less than fifteen years old then you will be taxed on the original purchase price of the car. HMRC's definition of a classic is likely to be a bit different from yours or mine!

[GarryV]

Does anyone have any 1st hand experience of doing this (buying a classic as a company car) is it still possible to do so and if so what are the current financial limits.
Also any experience of, after owning it for 3 years and depreciating it down to 0, and then selling it on ?

most grateful for any updates on this.

[TurboJames]

Interesting topic this one, back to the top to see if anyone has made this work for them. Running a classic as a company car.

[robw1979]

Hi

New to the site, thinking of buying a TVR S2 through my Limited Company - anybody done anything similar and have advice on tax implications - it may be best to just buy it personally? The above topic has gone a bit quiet so hoping there is more info now......

Appreciate any advice.....

[Frio3535]

My understanding is that market value has the biggest effect on the potential viability of this. Anything up to £15k is taxed at original list price, anything over £15k is taxed at today's market price. The BIK % increases with engine size - I believe it's 32% above 2000cc. Maintenance of said car I don't know. This topic is something I wish to get more info on as I would happily run a 60's Alfa.

Edited by Frio3535 on Wednesday 3rd September 15:46

[bqf]

Its a total nightmare this and only really works if you buy a car that fulfils the definition of a classic for the threhold of £15,000. If it's worth more than that, the taxable value is the market price (what you paid, usually).

So, for example, if you wanted to buy a £30k Ferrari 456 through your company as your company vehicle, your year one tax would be over £10,000.

However, the 'grey area' is buying a car through a limited company for investment.....

[schmunk]

bqf said:

So, for example, if you wanted to buy a £30k Ferrari 456 through your company as your company vehicle, your year one tax would be over £10,000.

Just to clarify this, the benefit on which you would be assessed is £10,000, which for a 40% taxpayer means £4,000 of tax annually.

[isleofthorns]

Four Cofffee said:

I am assuming that as a business asset it would get some capital allowances, but also capital gains if it went up in value.

I have a 2000 Lotus Elise as a company car but it gets hammered more than perhaps it should by the original purchase price but we have had some depreciation allowed. I also SORN each winter it so I only pay 5 or 6 months company car tax.

I wonder if this would stack up with hmrc? I understood that a car is taxable whilst it's at your disposal, whether you choose to use it not., ie, if you decide not to tax and drive it, you still could, and it would still be taxed.