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LTD company too good to be true?

Discussion in 'The UK and Ireland' started by Jmad, Aug 2, 2017.

  1. Jmad

    Jmad New Member

    Joined:
    Aug 2, 2017
    Messages:
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    Location:
    Northamptob
    Afternoon everyone,

    At present my car is paid for personally from dividends I take from my company, and pay just over £450 a month, its high CO2 and MPG is ~25.

    I have been speaking to my accountant exploring the opportunity of sellin my current car and buying a Tesla Model S and running it through the company and benefiting from the government grant and BIK etc.

    I have seen people in a similar situation but cannot find any answers.
    The 75D comes in at £663 a month without considering the incentives etc with 7.5k deposit.

    What I would like to find out from buyers in similar situations is the following.

    1. The £450 I use to pay for my current car is from dividends and obviously taxed, by using the limited company is the £663 for the Tesla effectively the same if not cheaper than what I am currently paying?

    2. Can the deposit be written off part of the first year allowance?

    3. Can charging point installation also be claimed for?

    Is there anything obvious I am missing here as by the looks of this I should have done this last year!
    I appreciate any help and input.
    Cheers
     
  2. culverwood

    culverwood Member

    Joined:
    Oct 13, 2016
    Messages:
    75
    Location:
    Herts
    1. Remember the additional BIK cost to you personally.
    2. Only if bought but if contract hire it is a business cost anyway.
    3. Yes

    My company bought the car outright so were able to write off the full cost. We also installed charging points at our office as well as me doing so at home and both could be claimed for and gained grants.
     
  3. J1mbo

    J1mbo Member

    Joined:
    Aug 20, 2013
    Messages:
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    Location:
    UK
    You really need to discuss this with your accountant...

    There are a couple of benefits for having the company buy the car and the assign it to you as a company car:

    * The full list price of the car can be written off against profit in year one. This means a nice reduction in your corporation tax :) The downside is that when you sell the car, then whatever you sell it for is considered profit, and corporation tax is liable on profit. Effectively you are not paying corp. tax on the deprecation, which is nice.

    * The monthly payments, insurance and some running costs come from the company account, so are pre-tax

    * You can claim back some of the VAT depending on how much business use the car has (gotta be some business use, right?)

    On the flip side, you have a personal tax increase (BIK).

    Think that's all, but I am not an acocuntant so... YMMV
     
  4. Anode

    Anode Member

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    Aug 1, 2017
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    Location:
    London
    +1 to the above

    Note that if you had an LLP there is no BIK. My case here. No brainer to buy through business.
     
  5. Davidj

    Davidj New Member

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    Location:
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    I just put through my company and its a no-brainer.
    First and most importantly for me the 100% write down value.
    This means if for example you are buying a 100k car AND you have a net 100k profit in this or previous year (cannot go back further) then you get 19% (current sme corporation rate) relief thats £19k off the cost of your car. You obviously must have £100k profit that is not set against other capital purchases.
    With regard the BIK cost, Im sure your account can advise how to minimise this but should be a consideration, probably circa £200 PCM.
    Remember you will also personally benefit by realising the cash from the sale of your personal car as well.
    Just my thoughts.
     
  6. DJP31

    DJP31 Member

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    UK
    To be fair though that's not the whole equation. When you sell the car the proceeds are treated as a taxable receipt. What you end up with is tax relief on the depreciation of the car i.e. the difference between the purchase price and the sale price. I'm not saying it's not worth having though!
     
  7. Anode

    Anode Member

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    With an LLP or LP it's even better -- assuming you are a partner, full 100% relief at your marginal tax rate, and no BIK. Many set up LP just to hold cars. But if you are a law firm, accounting practice or other partnership this is pretty sweet.
     
  8. WannabeOwner

    WannabeOwner Active Member

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    Just thinking out loud:

    Plus the use of the £19K in that period (although given that the £100K is "gone" that may be moot!). Stick it in Tesla Stock and ti will probably pay for a new car in a coupe of years!

    To avoid increasing BIK you may choose to sell the car to yourself in a few years' time - at lowest reasonable price. So depreciation, and tax relief, is maximised and self-owned car is at a bargain price.
     
  9. Anode

    Anode Member

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    To avoid tax on sale, just roll it into a new car -- effectively a permanent deferral.
     
    • Like x 1
  10. AntB

    AntB New Member

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    Hampshire
    thanks. this thread was a huge help as a read prior to chatting to my accountant. new company car purchase on the horizon i hope :)
     
    • Like x 1
  11. DJP31

    DJP31 Member

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    Good to hear and allow me to offer a referral code in case you don't have one. £750 off and free supercharging.

    http://ts.la/david7784
     
  12. AntB

    AntB New Member

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    thanks. called Tesla Heathrow today. they said 10- 12 weeks on ordering. i will work back from when baby number 3 is due in Feb :D

    so a couple of months away from deposit time yet :)
     
  13. DJP31

    DJP31 Member

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    Congratulations! And baby number 4 shortly thereafter by the sounds of it. 4 months from confirmed order is about the norm. Keep in touch ;)
     

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