M3LR via limited company

[f1racer]

Hi,

I'm a director of my limited company and I'm considering a M3LR either through business lease or purchase using a loan. Just wondering if anyone has any advice to offer for either? I've spoken to my accountant to briefly go through the pros and cons, and I still can't decide which is better.

If business lease, are there any advantages of going through Tesla UK directly, rather than the many leasing companies online?

From an accounting perspective, a lease seems simpler to manage (put through the books) - claim full corp tax relief on the monthly lease and 50% of the VAT. At the end of the lease nothing to do other than hand the car back.

Purchasing seems more attractive as it's eligible for capital allowances relief. However, when the car is sold, that is subject to corp tax.

Appreciate any advice.

[mutsy88]

I'm in the same situation and went for leasing for exactly the reasons you highlighted. My worry with buying was based on the speed that EV cars are being developed/improved - I was worried that they would 'age' a lot quicker than equivalent ICE cars and might be hard to sell/exchange in due course.

To me, leasing was the best option as your basically paying for the expected depreciation and can then hand it back.

For what its worth I found a better deal through Vanarama than I could get direct with Tesla, but it changes weekly so make sure to shop around.

[MaxFromage]

Leasing is the lower risk option as the costs are fully known. And of course being able to reclaim 50% of the VAT is useful.

Buying may be a useful tool in the future with the new 19/25% corporation tax rates.

[f1racer]

Thanks for the advice so far! I will keep an eye on BCH deals.

More questions
- How does one arrange car insurance on a business car? It is as usual, a personal policy with business usage, and then claim back via company expenses?
- Does anyone bother with GAP insurance with BCH? Again, is this claimed as an expense?

Edited by f1racer on Saturday 29th January 23:55

[MaxFromage]

f1racer said:

Thanks for the advice so far! I will keep an eye on BCH deals.

More questions
- How does one arrange car insurance on a business car? It is as usual, a personal policy with business usage, and then claim back via company expenses?
- Does anyone bother with GAP insurance with BCH? Again, is this claimed as an expense?

Edited by f1racer on Saturday 29th January 23:55

You can insure personally making sure you advise that you are not the lessee. Then claim as an expense.

GAP is a personal preference, but again can be paid for by the company.

[Takemeaway]

Just wondering if anyone can work out the cost (or saving) of leasing for 3 years at, say, 6 months down and £600 net per month vs buying outright, the tax implication on purchase and sale assuming say a sale value at end of year 3/36k miles at maybe 60% of purchase price?

Lots of variables and assumptions but I’ve also been wondering which way is more cost effective?

Or is all this complete gibberish!!

[f1racer]

Takemeaway said:

Just wondering if anyone can work out the cost (or saving) of leasing for 3 years at, say, 6 months down and £600 net per month vs buying outright, the tax implication on purchase and sale assuming say a sale value at end of year 3/36k miles at maybe 60% of purchase price?

Lots of variables and assumptions but I’ve also been wondering which way is more cost effective?

Or is all this complete gibberish!!

Is this is personal lease/purchase then it's easier to work out.

Persoanl lease: £600 x 41 = £24.6k
Personal puurchase, cash, no options: £50k x 0.4 = £24k lost
In this case leasing would be the less risky option.

Through business it's more complicated as you would need to work out corp tax and VAT.

[Takemeaway]

f1racer said:

Is this is personal lease/purchase then it's easier to work out.

Persoanl lease: £600 x 41 = £24.6k
Personal puurchase, cash, no options: £50k x 0.4 = £24k lost
In this case leasing would be the less risky option.

Through business it's more complicated as you would need to work out corp tax and VAT.

Director via a limited company … bit more complicated isn’t it!!

I wonder what the tipping point is re vat and CT and then what to do at resale time - or maybe keep it longer …

[f1racer]

Takemeaway said:

Director via a limited company … bit more complicated isn’t it!!

I wonder what the tipping point is re vat and CT and then what to do at resale time - or maybe keep it longer …

With buisness lease you claim the monthly lease and deposit (exc VAT) as a business expense, so effectively writing off against profits saving on corp tax. You can reclaim 50% of the VAT.

With business purchase you can claim the vehicle cost against capital allowance. However, you can't reclaim any of the VAT - many don't realise this but this is set by the HMRC. The only one exception to this is if there is absolutely no personal use of the vechicle. Also, when the business sells the vehicle that will be taxable, so expect a tax bill down the line.

Peronsally, I think the lease option is the easier of the two but likely to be the costlier option as well. Then again, any new vehicle isn't going to be cheap, whether it's personal or business, leased or purchased.

Purchase and keeping for longer will definately work out much better but then again it's no longer a fair comparison. Would you want to tie up £50k of the company's money in a vehicle? Do you want to keep a vehicle for more than 3 years, factoring in maintenance costs, out of warranty (in year 4 / 50k miles) etc?

Leasing on paper may seem the expensive option but all the risks are set out clearly, you know exactly how much the cost is over the duration. With a purchase, the current used values makes one think leasing is poor value but who knows what the value of a M3 will be in 3 years time. The technology is changing and also think about the volume of used M3s on the market to come. I'm sure I've read the M3 was the best selling car in Dec and currently Tesla have no supply issues. This is likely to flood the market with used M3s in the years to come. With competition to bring greater volumes and lower costs, do you think the high used prices are sustainable? Overall, too many factors which effectively could become risks.