(Electric) Company Car 'v' (Non Electric) Personal Car
Discussion
Hopefully someone on here has the time (and inclination) to respond to my query, as everyone I ask seems to give me a differing answer on the question.
I currently have an Audi A6 for general work stuff, which on personal lease costs me circa £350.00 per month. If was up for renewal in June but I extended it for 6 months as was looking at potential replacement options, and if I'm honest had not done anything in time.
I have my own business, Limited Company, VAT registered (flat rate scheme at present) consulting to various clients.
I looked at Jaguar I-Pace as an option, but more recently the Audi E-Tron, as prefer the look of these. I don't do any real long trips (the very occasion drive to London) but 95% of my journeys are less than 20 miles.
So... with BIK on the Audi (or Jaguar) being 0% for 2020/21, 1% for 21/22 & 2% for 22/23 if seems an ideal time to get one on a 3 year lease through the business. That's the logic anyway.
What I am thinking is;
1. I lease the Audi, and it costs me circa £550.00 per month (plus VAT), so £660.00 in effect (which is some £310.00 per month more than the current A6)
2. I can potentially claim 50% of VAT on payments, reducing the monthly actual cost to £605.00 (still some £255.00 per month more than the current A6)
3. My fuel bills vanish, which are only circa £75 per month (at this point the e/o cost of the current A6 reduces to circa £180.00 per month)
However, the actual cost of me withdrawing £350.00 per month at present to pay for the A6 is nearer £525.00 per month as I pay 32.5% on these drawings as a dividend. This additional £175.00 therefore reduces the e/o cost for the E-Tron, over that of the A6 to £5/month) - from note 3 above.
Is this correct so far ???
Finally, as this would be a new car, I believe I can write an amount of the price of the car off again corporation tax for the company, thus reducing my annual tax bill. This is the bit I genuinely am not sure on, but seems to be 100% of the price in the first year. So for example, say my company turns over £150,000.00 and has no real outgoings of any sort, so in essence is all profit, and I pay myself in dividends, what does this mean in the real world for figures.
To me, going electric seems to be a no brainer, as whilst the monthly amount leaving my bank will be more per month, over the financial year I will be significantly better off.
Right/wrong ???
I currently have an Audi A6 for general work stuff, which on personal lease costs me circa £350.00 per month. If was up for renewal in June but I extended it for 6 months as was looking at potential replacement options, and if I'm honest had not done anything in time.
I have my own business, Limited Company, VAT registered (flat rate scheme at present) consulting to various clients.
I looked at Jaguar I-Pace as an option, but more recently the Audi E-Tron, as prefer the look of these. I don't do any real long trips (the very occasion drive to London) but 95% of my journeys are less than 20 miles.
So... with BIK on the Audi (or Jaguar) being 0% for 2020/21, 1% for 21/22 & 2% for 22/23 if seems an ideal time to get one on a 3 year lease through the business. That's the logic anyway.
What I am thinking is;
1. I lease the Audi, and it costs me circa £550.00 per month (plus VAT), so £660.00 in effect (which is some £310.00 per month more than the current A6)
2. I can potentially claim 50% of VAT on payments, reducing the monthly actual cost to £605.00 (still some £255.00 per month more than the current A6)
3. My fuel bills vanish, which are only circa £75 per month (at this point the e/o cost of the current A6 reduces to circa £180.00 per month)
However, the actual cost of me withdrawing £350.00 per month at present to pay for the A6 is nearer £525.00 per month as I pay 32.5% on these drawings as a dividend. This additional £175.00 therefore reduces the e/o cost for the E-Tron, over that of the A6 to £5/month) - from note 3 above.
Is this correct so far ???
Finally, as this would be a new car, I believe I can write an amount of the price of the car off again corporation tax for the company, thus reducing my annual tax bill. This is the bit I genuinely am not sure on, but seems to be 100% of the price in the first year. So for example, say my company turns over £150,000.00 and has no real outgoings of any sort, so in essence is all profit, and I pay myself in dividends, what does this mean in the real world for figures.
To me, going electric seems to be a no brainer, as whilst the monthly amount leaving my bank will be more per month, over the financial year I will be significantly better off.
Right/wrong ???
Complicated stuff it seems … I've asked my accountant and their response seemed a little wooly to say the least. I don't think they are up to speed with this side of things at present.
It would however seem my basic logic is correct, with exception of the ability to offset the price of the car against corporation tax, which is far from the end of the world, but would have been an added bonus.
The other thing I failed to add was that if I do business mileage, I charge my clients 45p per mile as my contracts with them. I appreciate this is a rate set by the government for petrol/diesel cars, but my contract says nothing, so I can still charge the same for an electric car. If I do even 250 miles per month which I can book to clients, that gives me a further £112.50 for, in essence, free.
That then takes me to the point that I would be £107.50 better off driving a £70,000.00 electric car hired through the business, than a £40,000.00 petrol car hired personally.
Again, I think this is right ???
It would however seem my basic logic is correct, with exception of the ability to offset the price of the car against corporation tax, which is far from the end of the world, but would have been an added bonus.
The other thing I failed to add was that if I do business mileage, I charge my clients 45p per mile as my contracts with them. I appreciate this is a rate set by the government for petrol/diesel cars, but my contract says nothing, so I can still charge the same for an electric car. If I do even 250 miles per month which I can book to clients, that gives me a further £112.50 for, in essence, free.
That then takes me to the point that I would be £107.50 better off driving a £70,000.00 electric car hired through the business, than a £40,000.00 petrol car hired personally.
Again, I think this is right ???
Sorry, the 45p per mile is not what my company will pay me, it is the contract I have with all my clients, ie that for any business miles I do on behalf of them I charge them 45p. It's somewhat irrelevant what the government say on this to me, I could charge 1p, I could charge £10. It just an agreement I have, to which I add this to my invoice to clients.
I called down to the local Audi dealer this afternoon to look around their shownroom e-tron. They are very nice, although not sure 75k worth of nice, however when I looked at the I-pace also I got the same feeling. Clearly at present you are paying for the technology.
The residuals on them after 3 years I believe are expected at circa 53%, so not too shabby, hence no doubt the relatively inexpensive monthly lease costs.
The residuals on them after 3 years I believe are expected at circa 53%, so not too shabby, hence no doubt the relatively inexpensive monthly lease costs.
Think I'll go with the e-tron as electric through the company does seems no brainer, and prefer the audi to the Jag, Merc & Tesla.
The dealer did mention a '50' model that is due out soon, rather than the '55' which would like be around £80 per month cheaper on contract hire, but look at the specs on these the range doesnt look great.
The dealer did mention a '50' model that is due out soon, rather than the '55' which would like be around £80 per month cheaper on contract hire, but look at the specs on these the range doesnt look great.
Phleaser said:
This ad was showing up on my Linkedin feed.
Seems interesting for LTD companies...
Not available for personal contracts
https://www2.vwfsfleet.co.uk/audi_e-tron_August_20...
Hmmm. does look a decent deal.Seems interesting for LTD companies...
Not available for personal contracts
https://www2.vwfsfleet.co.uk/audi_e-tron_August_20...
I've hot the Audi guys doing me a quote for 9+35, 10000 miles per annum so will post up what they come back with.
Quote I've just had on the Audi E-Tron;
3 + 23 (10,000 miles per annum)
Vehicle, £451.67 per month
Metallic Paint, £23.47 per month
Privacy Glass, £14.87 per month
Audi Music Interface To Rear, £5.48 per month
Appreciate its a fairly basis spec, but to be honest the car as standard is pretty well equipped (as it should be for a 75k car). This comes out at £495.49 per month, or a total cost over 24 months of £12,882.74 (for what including options is an 80k car).
Reality is, it will probably save me nearly the 12k over the 2 years, so in essence is free motoring. I also use the 'flat rate' VAT scheme for my business which alone makes me pretty much the amount the car will cost per month.
The only option I'm considering adding, which isn't shown above is the panoramic sunroof, which is £46.16 per month. Its a 'nice to have' but just not sure its worth the money if I'm honest.
3 + 23 (10,000 miles per annum)
Vehicle, £451.67 per month
Metallic Paint, £23.47 per month
Privacy Glass, £14.87 per month
Audi Music Interface To Rear, £5.48 per month
Appreciate its a fairly basis spec, but to be honest the car as standard is pretty well equipped (as it should be for a 75k car). This comes out at £495.49 per month, or a total cost over 24 months of £12,882.74 (for what including options is an 80k car).
Reality is, it will probably save me nearly the 12k over the 2 years, so in essence is free motoring. I also use the 'flat rate' VAT scheme for my business which alone makes me pretty much the amount the car will cost per month.
The only option I'm considering adding, which isn't shown above is the panoramic sunroof, which is £46.16 per month. Its a 'nice to have' but just not sure its worth the money if I'm honest.
MaxFromage said:
I haven't replied regarding the VAT flat rate point you made as you are correct. There's no need for me to confirm it again.
OP- If your accountant is a bit woolly on the subject then I think you should consider changing accountants. You are registered flat rate, so cannot claim the VAT on your lease, fuel (electricity), servicing etc. A quick calculation suggests you'd save 25% on your motoring costs, but these calculations need to be assessed on a case by case basis.
Also there are much better deals on iPace than the one you suggest for the Etron. Have a look at someone like Gateway to Lease.
Firstly, with regards to the car. Like most purchases, it is not simply picking the cheapest, it involves picking the one which is best suited to the person. On that basis, for myself, the E-Tron is the one I prefer. If I wanted something cheaper there are other (non suitable) cars I could consider.OP- If your accountant is a bit woolly on the subject then I think you should consider changing accountants. You are registered flat rate, so cannot claim the VAT on your lease, fuel (electricity), servicing etc. A quick calculation suggests you'd save 25% on your motoring costs, but these calculations need to be assessed on a case by case basis.
Also there are much better deals on iPace than the one you suggest for the Etron. Have a look at someone like Gateway to Lease.
In relation to the flat rate VAT scheme, I understand the basis of this, ie that I would not be able to reclaim VAT on purchases. At this point I am on the flat rate scheme, at 13%. I'm invoicing out circa 15k per month, and the amount of VAT I would be able to recover (excluding the potential car) is negligible. As such on the 15k I invoice, this equates to 18k including VAT (or 3k in vat), but at 13% I pay back VAT totaling 2.3k, so in essence make £640.00 per month for nothing (less the bits of VAT I cannot claim back).
The E-Tron (which I have just ordered - for the sake of thread updates) is going to be £497.00 per month (including a few options), so in essence being on the flat rate scheme pays for this.
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