Tax efficient purchase of hybrid vehicles?
Discussion
Does anyone have any good links to somewhere that explains how you can purchase via a limited company, a hybrid / electric vehicle for a combination of business and personal use? There's a lot of info about but having never bought a car via a business before it's a little confusing.
I read before that an i8 / Tesla etc. works out to be £30k less if purchased in this way, and that if you lease them you can take off the VAT or... anyways, lots of info, any consolidated information sources so it can be fully priced up? Thanks!
I read before that an i8 / Tesla etc. works out to be £30k less if purchased in this way, and that if you lease them you can take off the VAT or... anyways, lots of info, any consolidated information sources so it can be fully priced up? Thanks!
Several of the early i8 threads here cover this in great detail - essentially if you are employed by your own profitable ltd co and take it as your company car there's a 100 % writedown against tax for the car and a lower BIK for you - the overall effect can be to make the car appear significantly cheaper
kbf1981 said:
Does anyone have any good links to somewhere that explains how you can purchase via a limited company, a hybrid / electric vehicle for a combination of business and personal use? There's a lot of info about but having never bought a car via a business before it's a little confusing.
I read before that an i8 / Tesla etc. works out to be £30k less if purchased in this way, and that if you lease them you can take off the VAT or... anyways, lots of info, any consolidated information sources so it can be fully priced up? Thanks!
You basically save 20% of the cost of the car as a reduction in your Corporation Tax in the first year of ownership.I read before that an i8 / Tesla etc. works out to be £30k less if purchased in this way, and that if you lease them you can take off the VAT or... anyways, lots of info, any consolidated information sources so it can be fully priced up? Thanks!
Be wary of the 100% write down, it unwinds when you sell to the value of the cars sale value and you can't buy it off yourself for a £1 either. Effectively over the life of the car you can only write off the depreciation.
The benefit is essentially that the costs of depreciation, servicing etc all come out of gross income and the cost to you is benefit in kind which this year is 7% of the list price of the car value (9% from April 17)
If there's even a hint of personal use then you can't reclaim vat on the purchase price but can on maintenance.
As an example and as I understand it, if you buy an i8 on the company, it's (assumed) 20k year 1 depreciation, servicing etc would knock 20k off your gross income (the reduction in your pocket depends how you take your company profit, but as a dividend that's 16k, or 12k if paye) and you'd pay bik of 7% on £100k, or about £3k of actual deduction from salary (assuming 40% tax). You'd only be 1k or 5k better off as the cost of the car is the sum of these. It's a little more complicated due to NI, marginal tax rates, and so on, and your estimate of those figures above may be different, plus there is a benefit in deferring tax if you want, but that's the basics.
Either way, you'll be lucky to run an i8 for mondeo money, but a potential 5k saving on a 20k running cost is not bad.
The benefit is essentially that the costs of depreciation, servicing etc all come out of gross income and the cost to you is benefit in kind which this year is 7% of the list price of the car value (9% from April 17)
If there's even a hint of personal use then you can't reclaim vat on the purchase price but can on maintenance.
As an example and as I understand it, if you buy an i8 on the company, it's (assumed) 20k year 1 depreciation, servicing etc would knock 20k off your gross income (the reduction in your pocket depends how you take your company profit, but as a dividend that's 16k, or 12k if paye) and you'd pay bik of 7% on £100k, or about £3k of actual deduction from salary (assuming 40% tax). You'd only be 1k or 5k better off as the cost of the car is the sum of these. It's a little more complicated due to NI, marginal tax rates, and so on, and your estimate of those figures above may be different, plus there is a benefit in deferring tax if you want, but that's the basics.
Either way, you'll be lucky to run an i8 for mondeo money, but a potential 5k saving on a 20k running cost is not bad.
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