LTD company too good to be true?

[WannabeOwner]

I'm having to lend the company money personally from savings for some of the cost.
...
100% first year allowance write down saves something like 10k (19%)

Does that mean the company doesn't have the declared profit to cover it? If so then the tax benefit will be reduced

As an individual charging at home I can still claim 4p a mile as I understand it.

Pedantic point: For business miles. On E7 you should be somewhere between 2-3p a mile (actually model-3 is more frugal than model-S so probably at the 2p end)

Must be in company name at first reg with person as keeper I believe. Check documents.

Good point, But I don't remember knowing about (or doing) that. Car was paid for with company-money though.

 

[richyrich77]

Am buying through company (small ltd company on flat rate vat).

I'm having to lend the company money personally from savings for some of the cost.

Intention is to hold car for a few years and sell at market rate possibly to me or family.

Then get a Model Y if tax is similar.

100% first year allowance write down saves something like 10k (19%) and costs / insurance / VED etc paid from company. Unsure of supercharger costs. I think insurance will be biggest cost. Lr3d awd

As an individual charging at home I can still claim 4p a mile as I understand it.

I am very far from being an expert in this and did look at PCP/business contract hire until my eyeballs bled and brain went on strike. Probably very annoyed accountant! First year allowance limited to buying so hire purchase or cash ok. But seemingly so was another scheme done by octopus (BCP/bch?).

UKNorthamptom your not far from me. I'm in Towcester!

What are you getting a Model 3 which one?
I am still considering a Used Model S as just prefer the look and feel but having trouble weighing up the pros and cons financially. I believe the tax relief is the same just not in the first year so don't see what the issue is. My accountant is getting alot of questions also but hell that's what we are paying them for right

 

[richyrich77]

My understanding were the tax benefits were only applicable on a new car? I bought my MX through my ltd company.

Also to confirm that you can write down 100% with PCP which is what I am doing.

Is that against the amount you've paid so far and believe this is 18% per year?

 

[Jason71]

Does that mean the company doesn't have the declared profit to cover it? If so then the tax benefit will be reduced

Well yes. In the short term. You cant reduce your tax bill to less than zero. If that is the case then by definition you have made a net loss that year, including the car purchase. So whether you can off set the loss against a previous year and reclaim tax paid the n I don't know. Probably not. Have to check that one with an accountant.
As has been said before though in the end you will ultimately pay the same amont of corporation tax is just when you pay it.
The normal capital allowance is 18% on a low CO2 car. Not sure if you can claim say 50% in the first year under the 100% allowance if that is all you have available then continue to claim 18% in the following years until you get to 100% or sell the car. Maybe?

 

[UkNorthampton]

Does that mean the company doesn't have the declared profit to cover it? If so then the tax benefit will be reduced



Pedantic point: For business miles. On E7 you should be somewhere between 2-3p a mile (actually model-3 is more frugal than model-S so probably at the 2p end)



Good point, But I don't remember knowing about (or doing) that. Car was paid for with company-money though.

Company doesn't have have profit YET. Should by March 2020.

As I understand it, unused first year allowance can be rolled into subsequent year(s) but I am not an expert!

Business miles only, yes. I don't have economy seven or Octopus 4 hour ish tarrif. Will look at. One thing against is that I might be better charging to 70-80% when car warm from trip home at 7pm rather than midnight.

Accountant insistant on company being named on documents and all money passing through business bank accounts.

 

[UkNorthampton]

UKNorthamptom your not far from me. I'm in Towcester!

What are you getting a Model 3 which one?
I am still considering a Used Model S as just prefer the look and feel but having trouble weighing up the pros and cons financially. I believe the tax relief is the same just not in the first year so don't see what the issue is. My accountant is getting alot of questions also but hell that's what we are paying them for right

Not an expert (covering myself!) But my understanding is secondhand means allowance of 18% or something each year for depreciation.

Also if you sell the car, the price is classed as profit in that year. Or corp tax.

So buy today at 50k and you have 10k allowance. Sell in 4 years for 25k and 5k gets added to corp tax bill. But I would choose a lean income year if possible.

Depreciation in company. Insurance in company.

 

[UkNorthampton]

On phone so difficult to post. What I meant in my example is buying new through company. First year 100% allowance only on new company registered electric cars.

For a larger company with car turnover it could be interesting and better than lease

 

[WannabeOwner]

One thing against is that I might be better charging to 70-80% when car warm from trip home at 7pm rather than midnight.

Interesting point. That would make a difference at Supercharger (will charge very slowly if battery is cold), but on 7KW home charger not sure that will make much difference ... if very cold, in winter, then battery heater will come on during charging (which wouldn't be necessary if you charged on arrival at home) and that will use some extra shore-power.

But (very roughly speaking) Off Peak E7 is half the price of Peak Tariff ... so its going to have to be very inefficient middle-of-night to use more than 2x as much juice.

More eco for the planet to charge at night too ... plenty of spare capacity then ... unless you could charge from your own PV during the day

 

[richyrich77]

Not an expert (covering myself!) But my understanding is secondhand means allowance of 18% or something each year for depreciation.

Also if you sell the car, the price is classed as profit in that year. Or corp tax.

So buy today at 50k and you have 10k allowance. Sell in 4 years for 25k and 5k gets added to corp tax bill. But I would choose a lean income year if possible.

Depreciation in company. Insurance in company.

So I have a company car through my LTD company at the moment which I had on PCP and just paid the balance. Looking to sell which will generate a profit that will be added to my corp tax. Something to be aware of potentially £1200 it I make the profit I expect.

Not actually sure how the sale needs to be recorded though yet as surely I could say I sold for less..

 

[Jason71]

So I have a company car through my LTD company at the moment which I had on PCP and just paid the balance. Looking to sell which will generate a profit that will be added to my corp tax. Something to be aware of potentially £1200 it I make the profit I expect.

Not actually sure how the sale needs to be recorded though yet as surely I could say I sold for less..

I think you would need a receipt for the company records. You could sell it to yourself but you cannot just sell it for say £1. That would be fraud. You have to sell it at the market value really but market value is a very subjective thing. My company has never owned/sold a car before but I have heard of people selling their company vehicles to themselves using valuations from the likes of We Buy Any Car or trade in valuations which tend to be on the low side and can thus be advantageous.

 

[richyrich77]

I am advertising it privately above what WeBuyAnycar are offering by over 4k at just under 22k. I am expecting to sell for closer to 20k so the corp tax is going to be 1290. Guess I'll have to just take the hit as no way I want or afford to pay my business that sort of money for a car I want shot of!

 

[Jason71]

I am advertising it privately above what WeBuyAnycar are offering by over 4k at just under 22k. I am expecting to sell for closer to 20k so the corp tax is going to be 1290. Guess I'll have to just take the hit as no way I want or afford to pay my business that sort of money for a car I want shot of!

Sure but once you buy it for the WBAC valuation I don't think there is anything to stop YOU selling it at a higher price.......

 

[richyrich77]

Sure but once you buy it for the WBAC valuation I don't think there is anything to stop YOU selling it at a higher price.......

Not sure I get what your saying. I am selling the car, it will get what ever the buyer pays for it. I'm not going to buy it myself so not sure how else I can avoid paying corporation tax on the sale.

One thought I've had is when I sell it I then transfer the money from my personal account to the business account and record a lower value for the sale. Is that allowed I wonder, can't see why....

 

[richyrich77]

Why not that is meant to say. I am technically selling it to myself I guess at a slightly lower valuation. I bag the difference and pay less at the corp tax.

 

[Jason71]

Why not that is meant to say. I am technically selling it to myself I guess at a slightly lower valuation. I bag the difference and pay less at the corp tax.

 

[MrBadger]

One thought I've had is when I sell it I then transfer the money from my personal account to the business account and record a lower value for the sale. Is that allowed I wonder, can't see why....

I would run that one past your accountant - preferably face to face to see what they have to say about it... I think I know the reaction I would get from mine.

 

[Rooster6655]

Yeah that is a good way for you to then have a personal tax liability making a profit that way which if your a higher tax payer will mean much more than paying corporation tax

 

[WannabeOwner]

I am technically selling it to myself I guess at a slightly lower valuation. I bag the difference and pay less at the corp tax.

If you sell to yourself at the price that WBAC quote I can't see revenue having a problem with that (that's been my accountant's solution to "get a price for the car" before now)

But won't you have an extra owner on the V5. Does that spoil YOUR sale price?

 

[richyrich77]

Sorry I am saying I just record the sale as if its to me instead of whoever buys it.

 

[6502]

It sounds to me like you're talking about fraud. Whether it actually crosses the line and you get caught is another matter, but if that's your plan then talking about it on the internet doesn't sound bright.
If the company you control sells you the car, it needs to do so at "market price". If you're going to keep the car then a quote from WBAC would do just fine for establishing a suitable value.
But if you've already lined up a buyer at a higher price, and then simultaneously sell to yourself at WBAC price and sell on at a profit then you've just proved that the WBAC quote was below market.
If you don't want the car, then have the company sell it for what it can get and pay tax accordingly. But personally flipping it is unethical at best.