LTD company too good to be true?

[WannabeOwner]

But personally flipping it is unethical at best.

An investigation from HMRC is well worth avoiding - even when nothing exists to be found - so even providing an indication that there might be, and that triggering an investigation, is worth avoiding in my book. Even if entirely legal, and no intention to resell, that might be a reason to not sell-to-self

 

[richyrich77]

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.

Not looking to purposefully commit fraud and thanks for clarifying how selling the car would work. I don't have a buyer as yet but I'm confident I'll still make a profit and be happy to pay the corp tax due

 

[Alset2go]

I am not sure if I missed a comment but just to be clear,

In order to claim FYA a car DOES NOT have to be brand new.

I spoke to Tesla,my accountant and HMRC and demonstrator miles are ok.

 

[UkNorthampton]

I am not sure if I missed a comment but just to be clear,

In order to claim FYA a car DOES NOT have to be brand new.

I spoke to Tesla,my accountant and HMRC and demonstrator miles are ok.

View attachment 432590

From memory - "first registered" - hence why should be in company name. I keep seeing used Teslas with VAT something - reclaimable. Curious but I'm not prepared to go down a new rabbit hole of research!

 

[richyrich77]

From memory - "first registered" - hence why should be in company name. I keep seeing used Teslas with VAT something - reclaimable. Curious but I'm not prepared to go down a new rabbit hole of research!

Spoke to my accountant today and it does need to be New. A Used EV will attract a 18% reducing balance which means maybe 2k in year and 18% less each year. New is definitely better

 

[richyrich77]

So has anyone considered buying two Tesla Model 3's? One for yourself as Director and one for your wife who is a employee.

Trying to weigh up the pros and cons.

Pros are I see:

FYA on both cars so roughly 20k saving on Corp tax in year 1.
As of April 2020 will be zero BIK then 1%.

Cons are I see:
Don't know what BIK will be in 2021/22, could go back up to 16% or higher.
Financing both wirh the same PCP deal will mean a large Final payment roughly 30k after Year 4

Any thoughts or additions to Pros and Cons?

 

[pow216]

BIK is currently 16%, then 0%, then 1%, then 2%...
BIK rates 2019 - BIK Tax Bands UK - Find BIK 2019/20

 

[Rooster6655]

I keep seeing used Teslas with VAT something - reclaimable. Curious but I'm not prepared to go down a new rabbit hole of research!

Claimable if eligible ie professional use only

 

[Jason71]

Cons are I see:
Don't know what BIK will be in 2021/22, could go back up to 16% or higher.

We do know the BIK
2021/2 1%
2022/3 2%

 

[Jason71]

So has anyone considered buying two Tesla Model 3's? One for yourself as Director and one for your wife who is a employee.

Trying to weigh up the pros and cons.

Pros are I see:

FYA on both cars so roughly 20k saving on Corp tax in year 1.
As of April 2020 will be zero BIK then 1%.

Cons are I see:
Don't know what BIK will be in 2021/22, could go back up to 16% or higher.
Financing both wirh the same PCP deal will mean a large Final payment roughly 30k after Year 4

Any thoughts or additions to Pros and Cons?

The need to have the £100K in profits necessary to not pay the 20K in Corporation tax?
Pro: if you have it
Con: if you don't

Whatever the pros and cons are of buying one car the they are the same just double. There are no extra limits or allowances that apply. The only other difference is that your wife will have a state of the art £50K electric car to drive. Which I assume is a pro.

 

[Rooster6655]

The need to have the £100K in profits necessary to not pay the 20K in Corporation tax?
Pro: if you have it
Con: if you don't

This is not necessarily the case as you can claim against previous profits or carry forward in some cases.

 

[Rooster6655]

Not looking to purposefully commit fraud and thanks for clarifying how selling the car would work. I don't have a buyer as yet but I'm confident I'll still make a profit and be happy to pay the corp tax due

It’s not fraud if the car is depreciated at a reasonable rate and the wbac is not any official method just a guesstimate of value.

If you sell it for more you will have to pay personal tax on your gain

 

[UkNorthampton]

Claimable if eligible ie professional use only

Thanks

 

[UkNorthampton]

I haven't ordered FSD. My company is buying the car outright.

My intention was to see how FSD progresses and try to buy it if some kind of deal is on.

Any ideas how a software unlocked feature is treated in a limited company? If I bought as part of initial purchase then it's just part of cost, but bought after?

Capital cost / depreciation? Operational cost?

Effect on corporation tax etc.....

 

[Noel83]

Hopefully you’d treat it as an improvement to the asset that would then go on the books and be depreciated along with the car.

Gonna need a switched on Tesla fan of an accountant to ask this one! Most seem to struggle with the basics of most cost efficient way to buy let alone questions like this

 

[Jason71]

It’s not fraud if the car is depreciated at a reasonable rate and the wbac is not any official method just a guesstimate of value.

If you sell it for more you will have to pay personal tax on your gain

Cars are exempt from Capitol gains tax

 

[Rooster6655]

Cars are exempt from Capitol gains tax

Yes if its your personal car, but if you buy a car that is intended to be sold for a profit then it's likely to be classed as a business transaction otherwise small time car dealers would never pay any tax which I am sure is the case for some!

 

[Jason71]

Yes if its your personal car, but if you buy a car that is intended to be sold for a profit then it's likely to be classed as a business transaction otherwise small time car dealers would never pay any tax which I am sure is the case for some!

You may be right in theory and if you did it repeatedly you would definitely be classed as a trader and yes then you would have to pay tax. Don't think HMRC have a number of car threshold but I also doubt that they have ever gone after anyone for flipping one car at a small profit. People sell classic cars at massive profit everyday. In practice I don't think one used Tesla is going to move the needle.

 

[Rooster6655]

You may be right in theory and if you did it repeatedly you would definitely be classed as a trader and yes then you would have to pay tax. Don't think HMRC have a number of car threshold but I also doubt that they have ever gone after anyone for flipping one car at a small profit. People sell classic cars at massive profit everyday. In practice I don't think one used Tesla is going to move the needle.

Yes thats right 1 car is pretty meaningless.

I think it comes down to how a person runs their limited company and what they do with their assets is their business and what risks they want to take on.

 

[richyrich77]

I am also not going with the FSD but Performance yes. I am tempted just to take my Lexus down to WBAC and see if they offer the 17k they quoted.