Tesla model 3 Business purchase Vs business lease Vs ?
Discussion
Ok so I've just been to local Tesla showroom to see a model 3 (again) after cancelling my day 1 reservation a month ago, stupidly.
Anyway, my question is this, I have a ltd company and my accountant says is a good idea to buy through the company due to the 1st year CT benefits.
BUT.... As I'm not 100% clued on up on this, can anyone offer any advice or tips?
Tesla say that if I ever sell it I could sell it to myself using a we buy any car quote to minimise the fallout at the other end, I didn't know I could do that.
I know I have to pay 2k up front, but would that have to come from ltd company account, as I'd rather use personal savings for that.
I just seen a bit confused and thought I'd ask PH for advice, options etc
Is there any benefit over leasing thru the business, if so what?
Personal lease is another option of course.
Cheers
Anyway, my question is this, I have a ltd company and my accountant says is a good idea to buy through the company due to the 1st year CT benefits.
BUT.... As I'm not 100% clued on up on this, can anyone offer any advice or tips?
Tesla say that if I ever sell it I could sell it to myself using a we buy any car quote to minimise the fallout at the other end, I didn't know I could do that.
I know I have to pay 2k up front, but would that have to come from ltd company account, as I'd rather use personal savings for that.
I just seen a bit confused and thought I'd ask PH for advice, options etc
Is there any benefit over leasing thru the business, if so what?
Personal lease is another option of course.
Cheers
If your accountant says it is a good idea based on a good understanding of your and the company’s finances and how the car will be used, why not take that advice? You are, after all, paying for it.
If the accountant’s statement is merely a general one, then it might still be valid for you. Or it might not.
As things look just now, taking an EV as a company car under the next changes to bik charges does look to be a very cheap way of driving an EV.
But the actual £ impact on you and your company of the different ways to drive an m3 might be small and there are many things to consider in the decision. What happens to the car - and any money arising from the disposal of it - is one of those things.
If the accountant’s statement is merely a general one, then it might still be valid for you. Or it might not.
As things look just now, taking an EV as a company car under the next changes to bik charges does look to be a very cheap way of driving an EV.
But the actual £ impact on you and your company of the different ways to drive an m3 might be small and there are many things to consider in the decision. What happens to the car - and any money arising from the disposal of it - is one of those things.
The CT benefit (you get a full deduction from your profit of the purchase price of the car - so if £40k cost you get £7600 off your corporation tax bill) is really one of timing - you have to pay CT on the full proceeds when you come to sell. With borrowing rates so low I struggle to see it as an amazing benefit - it’s an acceleration of the tax relief for depreciation. If you buy one outright (and it must be new or maybe ex dem for you to get the relief ) then you cannot claim back any vat on the purchase - though you can get vat back on service / maintenance / tyre cost
You should check with your accountant if hmrc will accept a we buy any car valuation for buying the car from the company. I am not impressed with anyone (esp an accountant) who says you should buy through the company because you get a CT deduction. V shallow and incomplete analysis - and you end up having to fund more of the purchase price than if acquired through contract hire. On contract hire, the provider claims back the entire vat on the purchase cost of the car so the interest is on the vat exclusive amount
I contract hire my iPace - that way I don’t have to fund in the same way as outright purchase and I can claim back 50% of the vat on the contract cost. Which is like an 8% discount (10/120) on the cost of the vehicle. I would perhaps buy outright if planning to keep for the longer term. There is also a danger that corporation tax rates will go up (a tax lecturer recently said to me that several different treasury departments are expecting that to happen for small companies)
You should check with your accountant if hmrc will accept a we buy any car valuation for buying the car from the company. I am not impressed with anyone (esp an accountant) who says you should buy through the company because you get a CT deduction. V shallow and incomplete analysis - and you end up having to fund more of the purchase price than if acquired through contract hire. On contract hire, the provider claims back the entire vat on the purchase cost of the car so the interest is on the vat exclusive amount
I contract hire my iPace - that way I don’t have to fund in the same way as outright purchase and I can claim back 50% of the vat on the contract cost. Which is like an 8% discount (10/120) on the cost of the vehicle. I would perhaps buy outright if planning to keep for the longer term. There is also a danger that corporation tax rates will go up (a tax lecturer recently said to me that several different treasury departments are expecting that to happen for small companies)
Business purchase or lease of a model 3 is my plan.
Benefit of purchase.
100% tax deductible in year 1 so long as you have the £40k + in the business account to buy it. You save 19% straight away as you’re reducing your profit by £50k so the 19% you’d have paid HMRC goes to Tesla instead.
Then all your costs for the car are business expenses as well.
BUT you must pay BIK (assuming its available for your personal use as well as business use) Currently thats at 16% of list price I think, so £50k, you’d pay 40% of 16% of the £50k i.e around £3500 ish.
Next april that drops to 2% of the list price so it really does get cheap.
Alternatively if you lease it then again its a fully deductible business expense AND you claim 50% of the VAT back from HMRC.
The initial rental is also a business expense which if you wanted to ‘loan’ the company that money then I believe that’s ok but we’re just punters on an Internet forum so get this verified in simple terminology by your accountant till you’re 100% happy.
Once you take the petrol savings into account the man maths is very good indeed.
I’ve got an a class until April so aiming to get mine to time for delivery then just as BIK drops but before my year end so I can get the corp tax saving if I choose to buy outright.
FSD or not....decisions decisions!!!
Benefit of purchase.
100% tax deductible in year 1 so long as you have the £40k + in the business account to buy it. You save 19% straight away as you’re reducing your profit by £50k so the 19% you’d have paid HMRC goes to Tesla instead.
Then all your costs for the car are business expenses as well.
BUT you must pay BIK (assuming its available for your personal use as well as business use) Currently thats at 16% of list price I think, so £50k, you’d pay 40% of 16% of the £50k i.e around £3500 ish.
Next april that drops to 2% of the list price so it really does get cheap.
Alternatively if you lease it then again its a fully deductible business expense AND you claim 50% of the VAT back from HMRC.
The initial rental is also a business expense which if you wanted to ‘loan’ the company that money then I believe that’s ok but we’re just punters on an Internet forum so get this verified in simple terminology by your accountant till you’re 100% happy.
Once you take the petrol savings into account the man maths is very good indeed.
I’ve got an a class until April so aiming to get mine to time for delivery then just as BIK drops but before my year end so I can get the corp tax saving if I choose to buy outright.
FSD or not....decisions decisions!!!
You’re not accounting for the corporation tax that you’d have to pay when you sell the car.
You save the 19% up front (£9500 on a £50k car) but if you sold it when the car was worth £25k then you pay £4750 to HMRC as corporation tax on the earnings from the sale.
I’m going to caveat the above - I don’t know how VAT is handled in the above equation and I’m definitely not an accountant but you’ll get the gist.
You save the 19% up front (£9500 on a £50k car) but if you sold it when the car was worth £25k then you pay £4750 to HMRC as corporation tax on the earnings from the sale.
I’m going to caveat the above - I don’t know how VAT is handled in the above equation and I’m definitely not an accountant but you’ll get the gist.
ive got a call with my accountant in 10 minutes.
This may be a none starter, but id like to forego the first year write off and simply record the monthly payments for the car like any other expense to get the CT reduction on the payments each month.
either that or see if i can put the evezy payment thru the business.
This may be a none starter, but id like to forego the first year write off and simply record the monthly payments for the car like any other expense to get the CT reduction on the payments each month.
either that or see if i can put the evezy payment thru the business.
MagicalTrevor said:
You’re not accounting for the corporation tax that you’d have to pay when you sell the car.
You save the 19% up front (£9500 on a £50k car) but if you sold it when the car was worth £25k then you pay £4750 to HMRC as corporation tax on the earnings from the sale.
I’m going to caveat the above - I don’t know how VAT is handled in the above equation and I’m definitely not an accountant but you’ll get the gist.
Good point cheers,You save the 19% up front (£9500 on a £50k car) but if you sold it when the car was worth £25k then you pay £4750 to HMRC as corporation tax on the earnings from the sale.
I’m going to caveat the above - I don’t know how VAT is handled in the above equation and I’m definitely not an accountant but you’ll get the gist.
Ref the vat if you buy it outright and it’s available for personal use then you can’t claim any vat back.
Can only claim vat back if you lease when you can claim 50% of the vat.
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