UK tax incentive issue

[unbelievable]

I’ve been looking into getting a Tesla Model S for the last couple of months and finally decided to take the plunge this weekend and put my order in. Unfortunately, I am very sorry to say that I am now unable to purchase a car.

The situation is this. I want to lease the car using PCP through my business in order to take advantage of the government tax incentives offered to businesses. So I applied for the finance using my business name and details. Because my accountant does such a good (and legal) job of my accounts, the finance application was rejected as Black Horse (the financial underwriters) don’t believe there is enough net worth in the business to support the loan.

My Tesla sales advisor suggested that I should apply for personal finance, which I did and got approved.

The problem is my accountant is saying that I need my business name to be on the invoice for the car, but Tesla will only put what is on the finance agreement, which is my name.

Does anyone know a legal way around this i.e. a way of buying the car with a peronal finance agreement, but putting it through my business so I can take advantage of tax benefits?

 

[Galve2000]

Are there any incentives in the UK for private citizens?

in terms of buying the tesla in the name of your business, can't you give some sort of Personal Guarantee or co-sign on the loan?

 

[thegruf]

How about putting it under the business and offering a director's guarantee against the loan. It does carry some risk of course but so long as you are confident in the business all should be well.

Have to add that this is not the first time I have heard business loans turned down for so called "affordability". It appears to be the banks' latest means of restricting loans to business and inevitably uses narrow criteria that do not reasonably represent reality. Makes it almost impossible to invest to grow or improve efficiency with capital equipment investment.

 

[unbelievable]

Are there any incentives in the UK for private citizens?

in terms of buying the tesla in the name of your business, can't you give some sort of Personal Guarantee or co-sign on the loan?

There is a £5,000 discount on the purchase price of electric vehicles for private and business buyers alike. Apparently, according to Black Horse a guarantee might have been an option to a new business, but I've been trading since 2012.

 

[Galve2000]

a guarantee might have been an option to a new business, but I've been trading since 2012.

god there is always "something"

if the incentive is the same, why insist on leasing it via the business? is there an extra incentive on the business side?

 

[unbelievable]

How about putting it under the business and offering a director's guarantee against the loan.

Hmm, thanks. I'll suggest that to my accountant.

 

[unbelievable]

god there is always "something"

Tell me about it.

if the incentive is the same, why insist on leasing it via the business? is there an extra incentive on the business side?

Yep. About £11,500 in the first year. then I have to pay some of this back as a benefit in kind tax. It's complicated but well worth it, and crucially makes it affordable to me.

 

[tonyj01]

Here is a method.

I assume you are a director of the business and you are aware of "director's loans".

You borrow the money yourself personally [a cheap way can be via an offset mortgage facility]. Then you loan the money as a director to the company which then buys the car, owns it, and is invoiced for this. The company then pays you for the loan, and you pay back the lender. The director's loan repayment is not taxable.

This way you get the OLEV grant, plus the Corporation tax benefit.

Regards,

Tony

 

[unbelievable]

Here is a method.

I assume you are a director of the business and you are aware of "director's loans".

You borrow the money yourself personally [a cheap way can be via an offset mortgage facility]. Then you loan the money as a director to the company which then buys the car, owns it, and is invoiced for this. The company then pays you for the loan, and you pay back the lender. The director's loan repayment is not taxable.

This way you get the OLEV grant, plus the Corporation tax benefit.

Regards,

Tony

Thanks Tony. That's a good idea, although I have just remortgaged. I might go for a loan instead, although after a quick look I can only get a £50k, and that's at 5% rather than the 1.5% offered by Tesla. I suppose beggars can't be choosers! It's all so annoying!

 

[Belly Buster]

Personal guarantees aren't worth much and the banks know this. If the business fails usually it is because the owners don't have the funds to support it and therefore don't have the personal funds either. The best a PG will get the banks is a "x-pence-in-the-pound" settlement. I'm not saying this is the case with yourself but of course they have to take a general view.

Finding a way of buying the car personally or in your own name, but passing it off as a business "expense" is fraudulent I'm afraid, so don't try that.

The best bet may be to get a business loan. Your current business (or personal) bank may take a different view to Black Horse so this is worth a try. You could also try peer-to-peer lending (e.g. Funding Circle). Maybe you could do a combination of bank loan plus directors loan to get the funds in place.

Good luck.

 

[WannabeOwner]

Black Horse don’t believe there is enough net worth in the business to support the loan.

Presumably your bank knows the viability of the company and would loan? If not change banks!

Our family business activities were with Sharkleys for 3 generations, but I didn't want to be seen to be giving my support to an organisation that repeatedly got fined heavily, let alone the fact that the service had deteriorated to lowest-common-denominator of "Head Office Computer Says No And That's It" so we moved to Handlesbanken - should have done it sooner - proper old-fashioned banking and superb service.

 

[DJP31]

Our family business activities were with Sharkleys for 3 generations, but I didn't want to be seen to be giving my support to an organisation that repeatedly got fined heavily, let alone the fact that the service had deteriorated to lowest-common-denominator of "Head Office Computer Says No And That's It" so we moved to Handlesbanken - should have done it sooner - proper old-fashioned banking and superb service.

Sorry to be off topic but my company also banked quite happily with Sharkleys for years, no lending facilities ever used but an overdraft facility just in case. Come the banking crisis a guy we'd never met came in to our office and demanded the permanently unused facility be secured on the Director's residential property. I think the door was just about opened before he went through it. Been with Handelsbanken ever since, and yes proper banking and great service.

 

[culverwood]

Funnily enough we had the same experience as you but with Lloyds and moved to Sharkleys - we have never had any request for personal security from them and would give them the same treatment as you if it ever happened.

 

[WannabeOwner]

Our exit from Sharkleys was preceded something along these lines (after the 2008 thingie when they discovered their liquidity was inadequate ...) - my story feels a lot like the "Director's residential property security" thing ...

We had Premier Banking at Sharkleys - sounds grand, but I'm sure the World and his Wife also had it ...

... anyways, it had a facility called Select Loan, which was (to my mind) a substitute for an Overdraft Facility. Ability to borrow against a pre-agreed limit, 5 year pay back, no penalty for early payment, draw-down with a short phone call; so we used it if we had a large payment going out, which we then cleared within a few months. Like an overdraft, natch. From memory the arranged limit was £30K - that's each for me and spouse. I doubt we ever dipped into it by more than £10K, and for 3 months tops.

So we got a letter "Select Loan is being terminated in 30 days"

Phoned up:

"Why?"

"Liquidity"

"Can we have an overdraft instead please"

"No"

"Do many of your Premier customers actually make use of the Select Loan"

"No"

"Did you think to only terminate it with them?"

"No"

"So we have 30 days before it terminates, and we can draw down in that time?"

"Yes"

"OK, we'll draw down the whole £60K please"

<silence>

"Hopefully you won't find that all the other people you speak to do the same thing"

We stuck it in Ernie, which paid out dribs-and-drabs around the same as the Select interest (with was only a couple of % at that time anyway), until we moved to Handelsbanken. Handelsbanken gave us an overdraft offset to the full mortgage value of our property (it may well be dressed-up as something different to that, but that's what I see it as!), which is a much better arrangement to my way of thinking.

 

[culverwood]

Ours is an overdraft secured against part of the property and for a much larger sum. We also had the funds elsewhere to pay all of it off at any time so were immune to strong arm tactics. When Lloyds put us on the naughty step we held a beauty parade and from memory Barclays were the only ones who would work with an overdraft, RBS and HSBC both wanted to offer some sort of factoring agreement.

 

[thegruf]

You guys got nothing until you witness the way RBSIF behave.
Truly shocking, and all the more so after all the attention brought to bear on RBS not least the public ownership.

Funnily we are reviewing our banking provision.

 

[Anode]

Agree with@tonyj01 if you can somehow figure out how to have the company buy it outright with no finance, you get the 100% write off in the 1st year and no BIK. If feasible, you could lend the company funds yourself either through a directors loan or sacrifice of dividends for eg. It’s like you are buying it with pre tax £

 

[thegruf]

Do note that with the CT benefit, you will effectively lose a proportionate aqmount of that benefit when you come to sell the car.

 

[Belly Buster]

Agree with@tonyj01 if you can somehow figure out how to have the company buy it outright with no finance, you get the 100% write off in the 1st year and no BIK. If feasible, you could lend the company funds yourself either through a directors loan or sacrifice of dividends for eg. It’s like you are buying it with pre tax £

There's no BIK on "fuel" used but there is definitely BIK on the vehicle.

 

[WannabeOwner]

There's no BIK on "fuel" used but there is definitely BIK on the vehicle.

Yup, that's been my experience, although I think the BIK is less than for ICE polluters? 50% springs to mind, but that was back-then and I think it is being tapered.

Cost of electricity for the year is little enough not to be something I consider avoiding, but return journey to work is about 50% of battery, so charge only at work unless I have to make a long journey next day / weekends, so I probably get 70% of charging done at work. But on 25,000 miles a year that's a saving or only £400 or so.

we are reviewing our banking provision

Recommend you put Handelsbanken on your short list, assuming they have a branch near you.