Tesla - Uk company car tax benefits

[sdodnib]

New to the forums and considering the benefits of buying a tesla through a ltd company or partnership

I read that the zero benefit in kind tax will finish in April, but couldn't find anything about the first year allowance ending.

Has anybody looked in to this?

 

[slartybartfarst]

New to the forums and considering the benefits of buying a tesla through a ltd company or partnership

I read that the zero benefit in kind tax will finish in April, but couldn't find anything about the first year allowance ending.

Has anybody looked in to this?

As I read it 100% allowance against tax year 1 is to be removed March 31st 2018 however other sites intimate gone after March 31st 2015. Bank on 2015 date but the gov could remove anytime. I think the site publish dates are responsible for the difference in dates ie was 2018 now 2015. Ive bought and paid for an S in August but the clock starts ticking from when the asset is put to use ( delivered anytime now) so Im in our Company 2014-2015 Financial Year and before the 2015 cut off so potentially OK.

 

[sdodnib]

Do you have a link where it says the 100% allowance will stop in 2015?

 

[mellington]

Do you have a link where it says the 100% allowance will stop in 2015?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/179238/capital_allowances_cars_with_low_carbon_dioxide_emissions.pdf.pdf

"The 100 per cent first-year allowance (FYA) for expenditure incurred on cars with low carbon dioxide (CO2) emissions and electrically propelled cars that is due to end on 31 March 2013
will be extended for an additional two years to 31 March 2015. In line with other FYA
schemes, cars acquired for leasing will no longer be eligible for the FYA."

Which clearly states that the FYA will end on the 31st March 2015 so it's back to standard depreciation of the asset. Which is one of the main reasons I'm awaiting delivery rather soon rather than wait for the X.

 

[sdodnib]

Yes I remember reading that page. However tesla have since updates their ev incentives page and state the fya continues until 2018, while providing a link to hmrc fya page.
Electric Vehicle Incentives | Tesla Motors
Hmrc only mentions 2018 for zero emission goods vehicles, whether this includes the model s or whether tesla have added the 2018 date in error needs to be clarified

 

[mellington]

I'm thinking that this is an error as there's no way that the car can be classed as a goods vehicle.

 

[dh12345]

Certainly looks like the 100% FYA allowance ends on 31 March 2013 based upon current HMRC documentation, the 2018 date refers to goods vehicles - if anyone can prove otherwise, please let me know.

Considering ordering soon but lead time on website indicates April 2015 which would be too late to qualify at 100%. For anyone who's ordered recently, do you have a date and IF they stick to it, how many months lead time would that be (referring to non dual motor option)?

- - - Updated - - -

Certainly looks like the 100% FYA allowance ends on 31 March 2013 based upon current HMRC documentation, the 2018 date refers to goods vehicles - if anyone can prove otherwise, please let me know.

Considering ordering soon but lead time on website indicates April 2015 which would be too late to qualify at 100%. For anyone who's ordered recently, do you have a date and IF they stick to it, how many months lead time would that be (referring to non dual motor option)?

First post and I get the crucial bit of info wrong - SORRY!

Should read....

Certainly looks like the 100% FYA allowance ends on 31 March 2015 based upon current HMRC documentation, the 2018 date refers to goods vehicles - if anyone can prove otherwise, please let me know.

Considering ordering soon but lead time on website indicates April 2015 which would be too late to qualify at 100%. For anyone who's ordered recently, do you have a date and IF they stick to it, how many months lead time would that be (referring to non dual motor option)?

 

[arg]

I read that the zero benefit in kind tax will finish in April,

Zero does indeed finish in April, but much-less-than-other-cars percentages continue for the next several years, so it's definitely still worth doing for the BIK advantage alone. Indeed, for me the 1st-year allowance is only a minor consideration (though obviously your circumstances may be different).

 

[dh12345]

Just so everyone understands, for company cars there are two main tax benefits.....

The first is the individual's benefit in kind (BIK), this is the personal taxable benefit of the car currently rated at 0% of the list price which does indeed move up to 5% in April 2015. The future rates for all CO2 bands are well established and available from the HMRC.

The second refers to capital allowances from which the company as the car owner benefits. This is set at 100% first year but there is some disparity as to what happens post 31 Mar 2015 between the Tesla UK website and HMRC. Reading HMRC info lends me to believe that this moves from 100% FYA to 18% per annum after 31 March 2015. The Tesla salesman believes otherwise and I am waiting for documentation from him.

Capital allowances are probably not an issue to most unless you are trying to prove the financial case to your finance director or you are the owner of the company.

 

[dh12345]

Found the HMRC info on FYA allowances. The good news is that zero emission vehicles DO stay at 100% until 31 March 2018

"9.1 Eligibility for Enhanced Capital Allowances (ECA) for cars are based on
their CO2 tailpipe emissions. Cars purchased from 1 April 2013 with CO2
tailpipe emissions:
 Over 130g/km qualify for the standard allowance. This is called a
‘writing down allowance’ and allows 8% a year of the value to be
offset against income.
 Over 95 g/km to 130g/km qualify for writing down allowances at 18%
a year.
 If car emits 95 g/km or less it can qualify for a 100% first-year
allowance but they must be new and not second-hand. Cars that are
leased also do not qualify. It has been announced that this emission
threshold will change to 75g/km for the period April 2015 to March
2018."


Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdf

 

[smac]

Capital allowances are probably not an issue to most unless you are trying to prove the financial case to your finance director or you are the owner of the company.

..and the company must must have the cash (or equivalent credit facilities i.e. a bank loan secured on something other than the car) to buy it outright.

Also worth noting you lose the 50% residual guarantee going this route, though I'm not sure it's available to businesses anyway.

Personally I took this route, but figured a 40% residual value into my analysis. Hopefully this is enough margin and I shouldn't "lose", but if used demand is strong it will act as a nice deposit toward a P85D in three years time, and hopefully the FYA is just still available

 

[mgboyes]

..and the company must must have the cash (or equivalent credit facilities i.e. a bank loan secured on something other than the car) to buy it outright.

Also worth noting you lose the 50% residual guarantee going this route, though I'm not sure it's available to businesses anyway.

To access the 100% FY capital allowance the company simply has to have the car as an asset on its balance sheet, i.e. it has to be bearing the risk of the unknown future depreciation.

That could be by buying it outright, but it could equally be by taking out a secured loan against it, or through some finance lease arrangements. The key is that the company must be bearing the risk of the depreciation, so it must either already own the car, or it must have a finance arrangement where at the end there is a (non-optional) final payment resulting in ownership of the car.

I would think that Tesla's approved finance options would include one which meets these requirements, i.e. where you could get both the 100% FY allowance and also their residual guarantee.

But I'm not an accountant, and I haven't looked at Tesla's finance options since they didn't exist when I bought my car.

 

[smac]

To access the 100% FY capital allowance the company simply has to have the car as an asset on its balance sheet, i.e. it has to be bearing the risk of the unknown future depreciation.

That could be by buying it outright, but it could equally be by taking out a secured loan against it, or through some finance lease arrangements. The key is that the company must be bearing the risk of the depreciation, so it must either already own the car, or it must have a finance arrangement where at the end there is a (non-optional) final payment resulting in ownership of the car.

I would think that Tesla's approved finance options would include one which meets these requirements, i.e. where you could get both the 100% FY allowance and also their residual guarantee.

But I'm not an accountant, and I haven't looked at Tesla's finance options since they didn't exist when I bought my car.

Accountancy isn't my day job either, but there is some HMRC guidance, and some discussion here:

Finance Lease - Company Car | AccountingWEB

Basically it leans toward the lease being an operating lease, not a finance one. This would mean no balance sheet effect, so FYA are moot, but the monthly payments would be P+L items and hence reclaimable.