BIK on EVs?

[cheeky_chops]

ive had a 24kw leaf for 4 years, great car, dirt cheap to run, range occasionally is a pain but we just use the missus diesel

Anyway, just seen the decent lease deal on the E golf which got me thinking of changing..... Ive recently become a limited company and as i understand it BIK is or will be zero on electric cars. Anyone else doing similar and have advise on what to/what not to do or how to calculate/salary to see if its even worth it?

[Guffy]

If you're getting an EV anyway, it's surely a no brainer to run it as a company car from next April.

[oop north]

There are quite a lot of threads on here (and in the finance and business sections of the forum) about this. Currently bik is list price x 16% x your marginal tax rate (20% or 40%). From 6 April 2020 for a year it is 0% instead of 16% and then 1% and 2% in the following tax years. There is no tax to pay on any charging of a company run EV. So from next April it’s tax free.

To do the maths properly you strictly need to look at VAT, income tax, dividend tax, employer’s National insurance and corporation tax. But with nil bik from next April it’s in the no brainer category

[lost in espace]

I am just going through this, I have a limited but little trading history so no leasing co will look at me at the moment. Remember that you will get 100% first year allowance on the car, but when you sell you have to pay a proportion of this back relative to its baloonsale value. It looks like BIK will go up by 1% a year, I understand that this will mean £320 car tax to be in 2021-2022, increasing 1% every year possibly so if you hold the car for 5 years you will be paying some BIK.

I have a Tesla due for delivery in a month but we have finally decided to Evezy with it arriving closer to April 2020. The tax savings on leasing/renting are much better than outright purchase/BCP. I can offset the whole cost of the lease against tax, although I will never own the car. But I am not sure I want to own a Model 3 in 4 years when there is a newer car out there.

[jamoor]

lost in espace said:

I am just going through this, I have a limited but little trading history so no leasing co will look at me at the moment. Remember that you will get 100% first year allowance on the car, but when you sell you have to pay a proportion of this back relative to its baloonsale value. It looks like BIK will go up by 1% a year, I understand that this will mean £320 car tax to be in 2021-2022, increasing 1% every year possibly so if you hold the car for 5 years you will be paying some BIK.

I have a Tesla due for delivery in a month but we have finally decided to Evezy with it arriving closer to April 2020. The tax savings on leasing/renting are much better than outright purchase/BCP. I can offset the whole cost of the lease against tax, although I will never own the car. But I am not sure I want to own a Model 3 in 4 years when there is a newer car out there.

I did a PCP with a balloon.

It's a total no brainer for me, £2k a year additional to buy a brand new car.

[Hobo]

Or obviously you could just lease it rather than buy. You cany obviously write the full value of, but you still get the BIK advantage through the company.

Re rates, its 0% in 20-21, 1% 21-22 and then 2% 22-23. Personally I think it will increase significantly at that not (not just keep increasing at 1%), which may catch a lot of people out who suddenly find themselves with expensive cars through the business on a high BIK.

As such, I've just ordered an E-Tron through my business (which like the OP is relatively new, so needed to provide a PG). The total cost of this over 2 years would have been £11,882.00 plus VAT, which on an 75k car seems very good (I'm actually paying £12,991.00 over 2 years due to adding a few options). If your VAT registered (on the standard scheme) you can claim 50% of all VAT payments back (I'm on the flat rate scheme so cannot, but I'm far better of on this scheme and not claiming the VAT).

[jamoor]

Hobo said:

Or obviously you could just lease it rather than buy. You cany obviously write the full value of, but you still get the BIK advantage through the company.

Re rates, its 0% in 20-21, 1% 21-22 and then 2% 22-23. Personally I think it will increase significantly at that not (not just keep increasing at 1%), which may catch a lot of people out who suddenly find themselves with expensive cars through the business on a high BIK.

As such, I've just ordered an E-Tron through my business (which like the OP is relatively new, so needed to provide a PG). The total cost of this over 2 years would have been £11,882.00 plus VAT, which on an 75k car seems very good (I'm actually paying £12,991.00 over 2 years due to adding a few options). If your VAT registered (on the standard scheme) you can claim 50% of all VAT payments back (I'm on the flat rate scheme so cannot, but I'm far better of on this scheme and not claiming the VAT).

I'm sure there's the potential for a loophole to be exploited here.

Employee of a company sets up a LTD company for the sole purpose of leasing a car and asks employer to pay part of his salary to the company.
Company leases car and employee uses it for the next 3 years.

That aside I do agree the BIK will increase sharply but most leases are for 3 years so thats ok for most people.

I am personally going for a 4 year lease and if we do end up in a situation where the lease becomes expensive I will just buy out the lease or pay it off myself.

[MOBB]

2 year lease deal on a Jaguar ipace incoming, can’t miss out on these kind of bargains

[Heres Johnny]

Only downside is company mileage rates drop from a 45p max a mile to 4p.

Depending on your business mileage that may change matters.

[cheeky_chops]

cheers all, certainly seems a no brainer!! 2 questions

If i buy the car now, pay the current BIK til financial year 20/21 starts, then do we benefit from the 0%? A couple of site ive read state its on for cars registered after 6th april 2020.

regarding trading history, hmmm yes someone said that i will struggle... As i side note, my wife is coincidently also just gone limited but she has 20 years self employed. Would they take this as history? Shes got her eye on a ipace now!! (edit - my wife was approved for a BMW business lease on her self employed account previously)

Edited by cheeky_chops on Sunday 1st September 22:03

[oop north]

If I remember correctly - Re the bik from April 2020, there is something very weird in the legislation in that newly registered cars from then have 0% for a year then 1% then 2%, whereas cars registered before then get a 2% discount from 2% (so nil) then a 1% discount from 2% (so 1%). No idea why they did it like that

[jamoor]

Heres Johnny said:

Only downside is company mileage rates drop from a 45p max a mile to 4p.

Depending on your business mileage that may change matters.

Isn't company mileage for non company vehicles?

[cheeky_chops]

Heres Johnny said:

Only downside is company mileage rates drop from a 45p max a mile to 4p.

Depending on your business mileage that may change matters.

No, neither of us do much business mileage hence the BIK on business lease EV's seemed v attractive!!!

[cheeky_chops]

oop north said:

If I remember correctly - Re the bik from April 2020, there is something very weird in the legislation in that newly registered cars from then have 0% for a year then 1% then 2%, whereas cars registered before then get a 2% discount from 2% (so nil) then a 1% discount from 2% (so 1%). No idea why they did it like that

cheers will see if we can do something with my wife as at least she has sole trader history

[jamoor]

oop north said:

If I remember correctly - Re the bik from April 2020, there is something very weird in the legislation in that newly registered cars from then have 0% for a year then 1% then 2%, whereas cars registered before then get a 2% discount from 2% (so nil) then a 1% discount from 2% (so 1%). No idea why they did it like that

I don't think the reg date matters.

[Heres Johnny]

jamoor said:

Isn't company mileage for non company vehicles?

How does a company car owner get reimbursed for the fuel they have to put into the car when used on business? If the petrol is paid for by the employer through a fuel card then that’s an additional benefit, so most reimburse at or below the gov max rate. EV is slightly different but similar principal.

If I used my EV car to do 10k miles I can claim 10k x 45p = £4,500 towards the cost of running and fueli g my own car, that’s out of pre tax company funds and paid to me free of tax and NI

If I used a company EV I can claim 10k x 4p = £400

Doesn’t matter to the OP as they do so few business miles, but if you did, that extra 4K goes a long way to reducing the benefit of a company car.

[ben5575]

I suppose it depends on whether you continue to drive and claim for your petrol car and your wife drives the EV doesn't it?

[lost in espace]

I have a private van the wife owns that currently does all the business miles and we claim the 45p, I am assuming we can still claim for these even if the company car does 0 business miles. Win win! Off to seek accountants clarifications, but my wife comes to all events and is a director so I can't see why not.