LTD company too good to be true?

[Jmad]

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

 

[culverwood]

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.

 

[J1mbo]

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

 

[Anode]

+1 to the above

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

 

[Davidj]

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.

 

[DJP31]

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.

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!

 

[Anode]

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.

 

[WannabeOwner]

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

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.

 

[Anode]

To avoid tax on sale, just roll it into a new car -- effectively a permanent deferral.

 

[AntB]

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

 

[DJP31]

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

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

 

[AntB]

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

so a couple of months away from deposit time yet

 

[DJP31]

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

so a couple of months away from deposit time yet

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

 

[jacket]

The UK Government has reduced the benefit in kind percentage to 0%, 1% then 2% for the 3 years starting April 2020. That makes it more tax efficient to buy a Tesla through a limited company.

More info here: Tesla Model 3 to be among the UK's best company cars amid EV-friendly policy update

I was going to buy a Model 3 in cash myself, but maybe I should buy it through my company. Any thoughts?

 

[Jason71]

The UK Government has reduced the benefit in kind percentage to 0%, 1% then 2% for the 3 years starting April 2020. That makes it more tax efficient to buy a Tesla through a limited company.

More info here: Tesla Model 3 to be among the UK's best company cars amid EV-friendly policy update

I was going to buy a Model 3 in cash myself, but maybe I should buy it through my company. Any thoughts?

Well it depends on your circumstances but if it is your company and your money then the options are:
a) take the money out and pay tax on it then buy the car
b) buy it through the company and pay almost nothing in tax, no corporation tax and only Income tax / NI on 0-2% of the value

All things being equal b is likely to make much more sense. Even if you pay yourself in dividends and stay below the higher rate threshold.
if you buy it through the company you also get to expense VED, tyres, servicing, repairs, insurance etc.

 

[WannabeOwner]

maybe I should buy it through my company. Any thoughts?

If you are a high (business) mileage driver I would look at owning the car and charging the company the Mileage rate (might even be able to charge the company the minimum and claim the differential against the higher rate against your personal tax). And also charge at work (No BiK) perhaps? But I'm no accountant

But other than that provided you can put the 100% first year allowance to good use that would be my choice. I can make that "lump sum" work far harder than straight-line-depreciation in the accounts (when you sell the car you make a "profit", and probably works out about the same as Deprecation (in the accounts) so the only difference is having the "opportunity benefit" of the money)

 

[Jason71]

If you are a high (business) mileage driver I would look at owning the car and charging the company the Mileage rate (might even be able to charge the company the minimum and claim the differential against the higher rate against your personal tax). And also charge at work (No BiK) perhaps? But I'm no accountant

I am not an accountant either but I think you are probably right for an ICE car at 20% + BIK and mileage rates of 45p/25p but isn't the HMRC approved millage rate for EV's 4p per mile. In which case by my calculation with a BIK of 0-2% to make taking the money out of the company by the cheapest means possible (corporation tax + dividend tax) and buying the car you would need to drive over 800,000 miles to break even and that is before considering insurance, tax, tyres etc.

 

[Rooster6655]

I am not an accountant either but I think you are probably right for an ICE car at 20% + BIK and mileage rates of 45p/25p but isn't the HMRC approved millage rate for EV's 4p per mile. In which case by my calculation with a BIK of 0-2% to make taking the money out of the company by the cheapest means possible (corporation tax + dividend tax) and buying the car you would need to drive over 800,000 miles to break even and that is before considering insurance, tax, tyres etc.

No the 4p per mile is if it is a company car, if it isn't a company car then its standard rate of 40p.

The company car scenario works out well for sole director companies who are in or close to the higher tax bracket with money they want to take out in the most tax efficient manner.

 

[richyrich77]

Hi all, I am trying to work out i buying a Used Model S say 85D is worth it considering I won't benefit from the first year right down allowance against my Limited Company.

I have had a Lexus IS300H F-Sport from new on a Contract Purchase and now the car is fully paid and owned but my Ltd company.

I am trying to get some figures to company a Used S against a New Model 3. Have ruled out a new S especially as they have removed the Standard range and are a little out of my comfort zone from a monthly outlay and balloon payment perspective.

Can anyone help with the different between Used S say £50k against a New 3 Performance £50k just to keep the starting point the same?

Appreciate any advice as might be looking to out down a deposit before my year end in 2 weeks!!

 

[WannabeOwner]

Is the first year 100% capital allowance only for brand new EVs? (IDK)