Company Taycan - Tax benefits

[9005rpm]

Afternoon all,

I have tried to find a simple answer which explains how the various tax charges work, but have failed. Could someone please enlighten me on whether the following is correct, and if I am missing anything.

So, if my company purchase a new Taycan I understand I get 100% capital allowance on the purchase price, and then when I sell it, the proceeds are treated as revenue. So, in effect the CT saving relates only to the depreciation. Personally I then pay 2% of the purchase price (this year) as BIK. I’m not sure whether I pay 2% of the purchase price, or 45% of the 2% (as a higher rate tax payer).

But, I don’t think I want the risk of buying a Taycan so I may PCP it over 2 years. What then is the corporate and personal tax consequence of that?

Finally, when is a car no longer considered ‘new’ for these purposes, and would a pre reg count as ‘new’? I think that when a car ceases to be ‘new’ the 100% allowance is not available, and instead I get 18% per annum. I guess it is then a question of weighing up that differing rate with the much reduced price of a year old car.

Any guidance you can offer would be appreciated.

Thanks !

[Discombobulate]

Demo / pre-reg counts a new but check the exact criteria for guidance.
As for tax position on PCP. I have had accountants tell me yes to 100% relief. And another say no. We bought our two (not Taycans) a few years ago so can’t be sure either way. Odd there is confusion though..

[Exystenshalist]

Re buying a car.

You can also buy a second hand car, but the tax treatment is different. I'm no expert, but I was told (and we bought a second-hand Taycan through the company) that:

You can take 18% of the purchase price of the vehicle each year from your profit.

Assume £100K
18K of 100K in year 1
18% of 82K in year 2
18% of remaining value in year 3
And so on

I think that when you sell, you then crystallise the value at that point. So you then deduct the purchase price of the car minus your sales price, minus whatever you have already claimed, from your company profit.

This is not as attractive from a cashflow perspective, but it does mean you can buy a second hand Taycan at an amazing price given the current carnage in the second hand market, and still enjoy favourable tax treatment.

As I say, I'm no expert so you would need to clarify this. (And I never understand the BIK, no matter how many times it's explained to me!). But this approach worked well for us and we bought a very lightly used car for about 40% off retail.

Edited by Exystenshalist on Friday 27th September 23:44

[HoHoHo]

I have a GTS on contract hire.

I can offset the payments and maintenance against CT, claim back 50% of the VAT portion of the rental and 100% of the VAT relating to the maintenance (pretty sure I have that the correct way around!). You can also claim back all the VAT for tyres etc.

The BIK is calculated at 2% of the ‘on the road cost’ including options - so if the car was £100k you pay your current tax rate on £2000 and divide that by 12 to get a monthly figure. My car costs me around £60 per month out of my pocket which is a bit of bargain!

I charge it at work every day and that’s covered by our electricity bill so no cost to me and if I use a charger on the road I understand we can claim all of the VAT and of course the net of VAT is an operating cost.

HTH.

[9005rpm]

This is super helpful thanks so much.

Seems like a bit of a no brainier vs a Cayenne on a personal PCP / purchase.

I think the sweet spot is the last of the old model pre-reg cars. Seems to be some good value there. Not sure I’d want to buy one, so i guess some form of business contract hire would work best.

Thanks again!

[Grantstown]

Sounds like a plan. I took the full 100% year 1, but if I was doing it now then it’d make sense to get a 2nd hand bargain and get the 18% PA. You’ll pay 45% on your 2% plus a small amount of NI.

These do make sense as a company car. If you pay your corporation tax and then tax your dividends, you’d be lucky to buy a 5 series for the same amount.

Pick up trucks also make good financial sense on BIK, but the disadvantage is that you have to drive a pick up truck!

Happy car hunting.

[garystoybox]

Some good points here. My owned from new 4s was written off last month. Replaced with a demo few months old GTS ST with 2k on the clock. Listed at £143k but got for £84k. The Porsche non reg PCP’s do seem, to somehow qualify for the 100% right down; according to my accountant as no mention of option to hand back (this would normally exclude) even though you can.
Still got to pay 45% on the 2% of £143k but a ridiculously good car for the money when procured this way…..

[garystoybox]

Some good points here. My owned from new 4s was written off last month. Replaced with a demo few months old GTS ST with 2k on the clock. Listed at £143k but got for £84k. The Porsche non reg PCP’s do seem, to somehow qualify for the 100% right down; according to my accountant as no mention of option to hand back (this would normally exclude) even though you can.
Still got to pay 45% on the 2% of £143k but a ridiculously good car for the money when procured this way…..
Ps this was important to us as the £77k insurance settlement would be taxable as company income so in essence just getting the right down on the £7k difference. Once in this purchasing regime it does seem to exclude future option of moving to lease without taking a big hit at some point.

[kbf1981]

garystoybox said:

Some good points here. My owned from new 4s was written off last month. Replaced with a demo few months old GTS ST with 2k on the clock. Listed at £143k but got for £84k. The Porsche non reg PCP’s do seem, to somehow qualify for the 100% right down; according to my accountant as no mention of option to hand back (this would normally exclude) even though you can.
Still got to pay 45% on the 2% of £143k but a ridiculously good car for the money when procured this way…..

What was the deal on this? Looking for one of our key employees.

Are porsche doing good rates also?