Outright buying a Tesla via limited company

[MrNik]

I’m planning to outright buy a Tesla MY through my business/limited company. I do not mean Hire purchase or contract hire. I mean pay the full amount and outright buy it (ofcourse assume I have comfortably enough amount)

- So wanted to know if this is a good idea ?
- Has anyone here bought one this way, can you share your thoughts pls ?
- Any advantages / disadvantages / suggestions ?

PS: As of now Im planning to keep the vehicle for a long time

 

[AndyFov]

If it's for 100% business use you should find yourself hit with a lower tax bill December 2024.

As to whether it's a good idea or not, that depends on luck and timing. I got it right with our Leafs, we rented the first two on a contract hire basis and paid far less in rent than I'd have paid in depreciation, and I didn't have my money tied up in an asset that wasn't generating any income during that time either. The third one we bought outright, second hand for £10.5k. Nearly 4 yrs and 45,000 miles later we've just sold it for £6k. It's cost £107 per month in depreciation, and we couldn't have rented anything for that.

 

[GeorgeSymonds]

You’ll save corporate tax on the depreciation, typically people write it down to zero in year 1, and then whatever you sell it for when it goes is pure profit and taxed at the rate at the time. I believe CT rates are going up and may be stepped so you may pay a higher CT % rate when it sells than what you save when you buy it. With low depreciation that mattered, sadly low depreciation doesn’t seem to be an issue (although you could be buying at a low price which might prove to hold its value well)

BIK is pretty low. Expenses aren’t much other than tyres at the moment.

The gotcha is business mileage rates. As a personal car you’d be able to claim 45p a mile, as a company car I think it’s 6p unless it’s changed, but v public charging costs and even regular home charging you can make a loss per mile. There are some things you can do to help mitigate that though, like the company paying for charging.

Only other gotcha I can think of is opportunity cost of that money. If it wasn’t sunk into the car, what would you do with it?

When depreciation was low it could be a finely balanced thing if you did 10k business miles a year and could only claim the minimum rate, now depreciation seems to be a real cost on ownership, putting it in the company makes sense.

The short answer however is ask your accountant as these things vary person to person and knowledge of your tax affairs can matter.

 

[MrNik]

You’ll save corporate tax on the depreciation, typically people write it down to zero in year 1, and then whatever you sell it for when it goes is pure profit and taxed at the rate at the time. I believe CT rates are going up and may be stepped so you may pay a higher CT % rate when it sells than what you save when you buy it. With low depreciation that mattered, sadly low depreciation doesn’t seem to be an issue (although you could be buying at a low price which might prove to hold its value well)

BIK is pretty low. Expenses aren’t much other than tyres at the moment.

The gotcha is business mileage rates. As a personal car you’d be able to claim 45p a mile, as a company car I think it’s 6p unless it’s changed, but v public charging costs and even regular home charging you can make a loss per mile. There are some things you can do to help mitigate that though, like the company paying for charging.

Only other gotcha I can think of is opportunity cost of that money. If it wasn’t sunk into the car, what would you do with it?

When depreciation was low it could be a finely balanced thing if you did 10k business miles a year and could only claim the minimum rate, now depreciation seems to be a real cost on ownership, putting it in the company makes sense.

The short answer however is ask your accountant as these things vary person to person and knowledge of your tax affairs can matter.

Yeah makes sense … to be honest that’s one of the reason I want to invest in the car as the money is just sitting in the business account doing absolutely nothing … obviously can pull that into personal account as it will be highly taxed

 

[MrNik]

If it's for 100% business use you should find yourself hit with a lower tax bill December 2024.

As to whether it's a good idea or not, that depends on luck and timing. I got it right with our Leafs, we rented the first two on a contract hire basis and paid far less in rent than I'd have paid in depreciation, and I didn't have my money tied up in an asset that wasn't generating any income during that time either. The third one we bought outright, second hand for £10.5k. Nearly 4 yrs and 45,000 miles later we've just sold it for £6k. It's cost £107 per month in depreciation, and we couldn't have rented anything for that.

To be honest, it will mostly be for personal use . I’m assuming that won’t change the situation anyways (as I don’t have that amount of cash in personal account) ? Yes, it does depend on luck but that’s something which is not in your hands so I tend to best not add it to the equation.

 

[Caramel]

Have done the same.

Most important tip is to not buy eap (or fsd) or a tow bar at order time. You pay BIK on the list price plus options at time of purchase. You can order these things later and the company can pay for them but it won’t affect the price for BIK purposes.

The company can pay for electricity directly either at work or at public chargers. It’s not a fuel benefit, no need to worry about nbusiness or personal mileage.

I don’t charge at home so don’t know if you can get any costs paid for that. The company can pay to install charging equipment at home.

 

[MrNik]

Have done the same.

Most important tip is to not buy eap (or fsd) or a tow bar at order time. You pay BIK on the list price plus options at time of purchase. You can order these things later and the company can pay for them but it won’t affect the price for BIK purposes.

The company can pay for electricity directly either at work or at public chargers. It’s not a fuel benefit, no need to worry about nbusiness or personal mileage.

I don’t charge at home so don’t know if you can get any costs paid for that. The company can pay to install charging equipment at home.

Great to hear! I’m assuming you’re using it for personal use and not purely business use.

Yeah I’m installing charger at home as a business expense

 

[Caramel]

Great to hear! I’m assuming you’re using it for personal use and not purely business use.

Yeah I’m installing charger at home as a business expense

Yes mostly for commuting (which technically isn’t business use!), though have driven it to the alps and the dordogne as well.

 

[ewoodrick]

I’m planning to outright buy a Tesla MY through my business/limited company. I do not mean Hire purchase or contract hire. I mean pay the full amount and outright buy it (ofcourse assume I have comfortably enough amount)

- So wanted to know if this is a good idea ?
- Has anyone here bought one this way, can you share your thoughts pls ?
- Any advantages / disadvantages / suggestions ?

PS: As of now Im planning to keep the vehicle for a long time

From some other discussions, what kills you is insurance. Corporate rates seem to be astronomically higher.

 

[WannabeOwner]

I've had Company EVs (2 of them at same time) since 2015 (paid cash). The BiK is modest.

I had a use / investment for the saved 1st year 100% write off, for the duration of ownership, which was a bonus

I'm not worried about the possible increase in corporation tax meaning that disposal will incur higher tax on disposal, compared to purchase, as I will buy a new EV at that time, and swings-and-roundabouts (until HMRC ditch the benefit)

I saw it as a way for the company to give me a nice car instead of me having to buy / finance one myself. If finance was 0% that might be different ...

I have free charging at work ... initially I was doing 30-35K miles a year, so a fair amount of home charging too - but it was a few £100 quid a year and I never bothered to claim it back. Electricity has gone up a lot since then ... but [if you have an off peak tariff] unless you are high mileage it won't amount to much.

I added EAP and premium connectivity (which I wouldn't bother with for privately owned) and all Supercharging is paid on company credit card

Personally I don't see the point of financing a company car (if company has the cash), just wind up paying 25% of the car in finance charges, as well as 50% in depreciation. I don't spend any money on polishing it either!

But as @GeorgeSymonds said - check with accountant.

 

[Jason71]

Have done the same.

Most important tip is to not buy eap (or fsd) or a tow bar at order time.

Or at all because they are a waste of time and money especially now that parking sensors are gone

 

[Rooster6655]

I’m planning to outright buy a Tesla MY through my business/limited company. I do not mean Hire purchase or contract hire. I mean pay the full amount and outright buy it (ofcourse assume I have comfortably enough amount)

- So wanted to know if this is a good idea ?
- Has anyone here bought one this way, can you share your thoughts pls ?
- Any advantages / disadvantages / suggestions ?

PS: As of now Im planning to keep the vehicle for a long time

One factor depends on the size of the company, if its just you then its easy to compare to buying it personally.

Pros:
-Charge electric to company
-Charge motor expenses to the business
-CT tax relief until sold
-Company takes hit for any depreciation vs personal
-Cheaper BIK compare to other NON EVs

Cons
-Missing out on the 45p per mile rate which if you do a lot of miles can mount up
-BIK can mount up even at the lower rate so worth comparing to a personal purchase
-Missed opportunity cost ie use the company funds to invest through a fund for example

My first Model 3 would have been better off by a few thousand if I had purchased it personally, this is based on purchase to sale price considering all factors, however the used prices were inflated when I sold it. The current Model Y I would probably be better off with the company purchasing it.

 

[WannabeOwner]

-Missing out on the 45p per mile rate which if you do a lot of miles can mount up
-BIK can mount up even at the lower rate so worth comparing to a personal purchase

My view is that these need comparing to the cost of personal financing (which is with tax-paid £pounds ). In times when 0% finance available that would swing it

might still work out fine, but I prefer to use my money for things that don't depreciate like a falling stone

 

[WannabeOwner]

My first Model 3 would have been better off by a few thousand if I had purchased it personally, this is based on purchase to sale price considering all factors, however the used prices were inflated when I sold it

probably could sell-to-self from company at that time (HMRC probably happy with a WBAC valuation which would inflate it too).

Dunno if extra driver on V5 (and any ancillary cost of ownership change) is a negative though

 

[Rooster6655]

My view is that these need comparing to the cost of personal financing (which is with tax-paid £pounds ). In times when 0% finance available that would swing it

might still work out fine, but I prefer to use my money for things that don't depreciate like a falling stone

Yes that is a fair point to consider, losing £80 personally could be equal to losing say £100 pre tax in company money depending on the taxes and anything related

 

[Peter Ferguson]

You’ll save corporate tax on the depreciation, typically people write it down to zero in year 1, and then whatever you sell it for when it goes is pure profit and taxed at the rate at the time. I believe CT rates are going up and may be stepped so you may pay a higher CT % rate when it sells than what you save when you buy it. With low depreciation that mattered, sadly low depreciation doesn’t seem to be an issue (although you could be buying at a low price which might prove to hold its value well)

BIK is pretty low. Expenses aren’t much other than tyres at the moment.

The gotcha is business mileage rates. As a personal car you’d be able to claim 45p a mile, as a company car I think it’s 6p unless it’s changed, but v public charging costs and even regular home charging you can make a loss per mile. There are some things you can do to help mitigate that though, like the company paying for charging.

Only other gotcha I can think of is opportunity cost of that money. If it wasn’t sunk into the car, what would you do with it?

When depreciation was low it could be a finely balanced thing if you did 10k business miles a year and could only claim the minimum rate, now depreciation seems to be a real cost on ownership, putting it in the company makes sense.

The short answer however is ask your accountant as these things vary person to person and knowledge of your tax affairs can matter.

It’s 9ppm now, it’s the only way it’s effective for me as I cannot charge at home.