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Switching from personal to Company/Director car. Insurance implications.

Discussion in 'The UK and Ireland' started by Dazboj, May 9, 2017.

  1. Dazboj

    Dazboj Member

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    Hi,
    I've got a test drive at Tesla in a couple of weeks. The cars are way over my budget however with many incentives as a company car the price comes right down (e.g. 100% tax right off in first year. Saves me 20% that would have been paid in Corporation Tax anyway).

    The main concern I have is with insurance.
    I have 9+ years no claims bonus.
    I believe that if the car is in my companies name, then the insurance also needs to be.
    I'm worried that I'll have to start a new policy and lose my NCB.
    Are there any company car insurance companies that will transfer the personal NCB?

    Also, does anyone have any experience with this switch, what kind of difference is there between company and private insurance?

    Thanks
     
  2. xnetco

    xnetco Member

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    I had this same problem myself. I ended up with Adrian Flux. Insurance still came in expensive at £960 per year.
     
  3. Dazboj

    Dazboj Member

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    Thanks.
    My current insurance on my Jaguar XF is £1,100 anyway which I think is too high.

    Did you switch from personal to company?
    What happened with your NCB?
     
  4. culverwood

    culverwood Member

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    How many other cars are on your company insurance? If it is a reasonable number the insurers aggregate the risk so the cost will be based on past claim history. In my company it costs much less to insure the Tesla via the company than privately.
     
  5. Dazboj

    Dazboj Member

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    My company is a 1 man band. So just me.
    I made big profits this year so think taking advantage of the first year rightoff would be a good thing to do.
     
  6. culverwood

    culverwood Member

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    I think you are right the savings in 1st year write-off will be much more than the increase in insurance cost from loosing your no claims bonus. Can you transfer you insurance to the company with your current insurer? One other thing to add to the equation is company car tax which will be an additional tax cost though that will be balanced by buying the car with pre corporation and income tax money.

    Not an easy calculation.;)
     
  7. mlee

    mlee New Member

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    Hi Dazboj,

    I've done exactly the same, always had a personal car but just bought a Model X through my company. For me, direct line was by far the cheapest, and they were happy to insure it in my name, and use my personal NCD, even though the V5C shows my company as the registered keeper.

    I'd get a quote from the website first, then phone them up to confirm the company is actually the registered keeper. (For me, they were able to match the online quote anyway - no guarantee they'll do the same for everyone, but it's worth a try!)

    Link and phone number here: Insurance For Your Tesla

    Good luck!
     
  8. INVIS

    INVIS New Member

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    Hi All

    I am in the same situation also, thinking to get the Model X through company car. Still doing some research on what option will be best for me, do you guys all go with the Hire Purchase route for the 1st year write-off? I am trying to see if it's possible to do salary sacrifice with PCP or Leasing the car, in theory, you could end up saving more with that no? 20% (or 40%) income tax, plus NI saving, along with cheaper monthly cost (PCP) and have the option to swap or buy the car after 3~4 years.

    What do you guys think?

    Regards
     
  9. doublebo7

    doublebo7 Member

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    i purchased a BMW i3 in 2014 in the company name but didn't realise that the company would be hit having no NCB.
    three years on my cover with Direct Line was £1250, they didn't take my personal NCB into account, but I'm sure you can transfer your personal NCB to company.
     
  10. mrkisskiss

    mrkisskiss Member

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    I went with Direct Line through their Tesla deal. It made it a whole lot easier -- did it all online. It was expensive, but it's an expensive car...

    Insurance For Your Tesla

    You have to follow that link on the Tesla site... it takes you through to a much simpler, Tesla focused Direct Line Quote/signup page.

    Hope that's useful!
     
  11. Dazboj

    Dazboj Member

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    Thanks for your replies. It seems like it'll be easier than I thought.
    The Direct Line Tesla link got me a quote of £990 which i'm happy with, and it says "The vehicle is owned and registered by you, your spouse, partner or civil partner (not business partner), by your parent, employer or a lease company. Your documents will state that the policyholder is the legal owner and registered keeper of the vehicle. The vehicle must be kept at your address."
    So it can be owned and registered to my employer (My company) which seems fine.

    Do you still get the £4,500 incentive when buying through a company?
     
  12. mrkisskiss

    mrkisskiss Member

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    yep, the incentive still counts - but bear in mind you never really see any evidence of the incentive; Tesla do it all on your behalf, so it's just deducted from the final purchase price.

    Only other thing I'd keep in mind is the Benefit In Kind that we have to pay for using company cars... I think it's 9% this year... but could be wrong.
     
  13. Dazboj

    Dazboj Member

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    Ok, so the way I see it then is a Model S 75 in white with the rear facing seats is £67,380
    There's a £4,500 incentive from the government which brings it down to £62,880
    First Year Rightoff would mean my company saves £12,500 that would have gone to the tax man as corporation tax, so in reality it's only costing the company £50,380 (Not bad for an almost 70k car).

    The BIK would be 9% of list price this year and 13% next year, costing me:
    9% = £[email protected]%=£2425
    13% = £[email protected]%=3500

    I'm assuming the company pays the insurance? Even if it's a personal policy in my name?

    And what about charging costs? Can they be attributed to the company, or does the standard 45p/mile come into play here?

    And finally, when I come to sell the car, the money received will be due Corporation Tax just like any other sale of goods.

    Oh and the cherry on top would be that I get to keep the ~£20k from selling my current Jaguar XF that I bought personally.
     
  14. INVIS

    INVIS New Member

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    Dazboj,

    First off, you don't take the £4,500 incentive off the £67,380, Tesla has already done that for you so you could say the original value of the car is £71,880 instead.

    Liked I have mentioned before, I am considering doing the PCP and buy a Tesla through my company but instead of putting it as a company expense, I will put it as my salary sacrifice. So let's say I take from your calculation above, £12,500 would be your saving and you would need to pay in full £67,380 or get a finance deal with some APR.

    The route I am considering doing will mean I can't have the first year rightoff of the full value of the car, you don't actually own the car with PCP. But I will put it as a benefit the company provide to me and it will deduct from my salary. With your spec car, I would need to pay about £550 per month meaning that's the amount of income tax + NI you could save.

    Let's say your yearly salary is £60,000, your take home money will be £3,548 per month, and you will pay a total of £1,452 in tax (Income + NI)
    If you do the PCP deal and get a Tesla and sacrifice it with your salary, your take home money is £3,229 and you will pay a total of £1,221 in tax.
    So you will save £231 per month in tax, so in about 4 and half years, you would end up saving the same. Your save even more if you are the director of the company (owned the company) as you pretty much paying 2x NI, one as an employer and one as an employee.

    BIK would be the same for both options, but the other difference would be with your option, when you sell the car, you would then pay back corp tax again meaning less saving. Also the initial investment is much lower with PCP option like mine, you will have to pay full price for the car and own it, I only need to pay £10,000 down payment and have the option to either buy the car or walk away after 3~4 years and not worry about the profit (selling) which would again offset your balance and you would end up paying corp tax.

    Of course, everyone's situation is a bit different, I am still trying to fully understand the potential saving for each option, what I suggested may not apply to you (if you are not actually getting paid by your company), I am no accountant, just doing my own research and speaking with my accountant friends who seems to suggest to me I should go with the PCP (or leasing from third party) to enable maximum saving.
     
  15. Dazboj

    Dazboj Member

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    Thanks for that Invis. The PCP and salary sacrifice model wouldn't work for me for a couple of reasons.
    Mainly because I only pay myself a 10k salary and the rest in dividends, and also because this year I have made a huge profit that I don't foresee making next year, so the First Year Rightoff would be very beneficial this year.

    As for the £4,500 incentive, can anyone else clarify this?
    On the Tesl website it gives 2 figures, £67,380 cash price and £60,500 after incentives and petrol savings.
    So one would assume i'd get the £4,500 knocked off the cash price.
     
  16. DJP31

    DJP31 Member

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    The 45p a mile is only if it is your car being used in connection with your employment. If it is a company car you cannot claim that amount. There is a separate much lower scale for fuel which you'd need to look into.
     
  17. mlee

    mlee New Member

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    I assumed the same when I was first pricing everything up, but invis is correct - the cash price of £67,380 is AFTER the £4500 has already been deducted. If you click on the "print spec sheet" link at the bottom of that box, it will show you a more detailed breakdown, including the real total of £71,880.

    (If you haven't already, make sure you use someone's referral link to get £750 off!)
     
  18. culverwood

    culverwood Member

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    You are welcome to use My Tesla Referral Code for the referral saving.

    I can see if you made a large non recurring profit buying through the company this year may be a good idea for tax and cash flow reasons. Has not the change in taxation in dividends made it less efficient than it was? I put much into pension this year to minimise tax.
     
  19. Dazboj

    Dazboj Member

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    Yes the new dividend tax rates have made it extremely expensive to take your rewards from your company, however i'm sure it's still better value than paying tax and NI on a salary. I may be wrong though.

    That is very sneaky of them and well hidden. I hadn't even seen that link before you mentioned it.
    So cost to company would be £66,630 (With £750 referral discount) saving £12,659 in CT making the true cost to company £53,970

    For the BIK values, i'm assuming they will take the pre 4500 price which is actually £71,500. So my costs would be:
    9% = £6,[email protected]%=£2,574
    13% = £9,[email protected]%=£3,718
    16% = £11,[email protected]%=£4,576

    Would the company pay the insurance?
     
  20. culverwood

    culverwood Member

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    Yes the company pays the insurance and it is included as part of the BIK benefit AFAIK. IE you do not need to add it as an additional benefit in your tax return.
     

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