company car a posibility?
Discussion
Impossible to answer without knowing the following -
make and model of tne car.
the list price of the vehicle.
the CO2 emission rating.
whether the company is paying for all or some of your non-business petrol.
If the comapny is yours, then you will also need to know that the company has to bear an additional National Insurance liability on the Benefit in Kind value of the car (and petrol if sapplicable).
make and model of tne car.
the list price of the vehicle.
the CO2 emission rating.
whether the company is paying for all or some of your non-business petrol.
If the comapny is yours, then you will also need to know that the company has to bear an additional National Insurance liability on the Benefit in Kind value of the car (and petrol if sapplicable).
Hi Eric,
While we are on the subject
If I bought a car through my business (main director and share holder), say a £30k 1 year old BMW 525 diesel (CO2=179g), pay for all my own fuel and even chip in £10k from my own pesonal money for the initial purchase what would my liability be and what's the extra burden to the company??
Or is it cheaper to get a lease car rather than buy outright?
While we are on the subject
If I bought a car through my business (main director and share holder), say a £30k 1 year old BMW 525 diesel (CO2=179g), pay for all my own fuel and even chip in £10k from my own pesonal money for the initial purchase what would my liability be and what's the extra burden to the company??
Or is it cheaper to get a lease car rather than buy outright?
Complicated question as you own the business:-
1) Company car - the company will get tax relief on the Capital allowances (lesser of £3k or 25% of purch price (next year £3k or 25% of "purch price less 2005 allowance"
). Also tax relief on ALL running costs (see Fuel separately below). Is a company asset, however, not your personal car.
YOU as an employee will pay car tax based on the LIST price when new of the car (think there's something about >4y.o. cars being treated more leniently), but the % of the value you're taxed on is proportionate to the emissions (get a 1.1 or a clean EuroIV diesel and you'll pay tax on 15% of list; get a 540i and it'll be 35% of list). E.g. £30k car, 40% taxpayer, 20% emissions rating: £30k x 20% x 40% = £2,400 tax per year
Fuel - if the co pays for ALL fuel, YOU as emp'ee will be taxed at a flat rate regardless of how many miles you drive. Co CAN, however, reimburse you for business miles travelled...you'll have to check rates.
2) Self-purchase. Simple, you know the score there. But you can't get tax relief on any of the car expenses, neither you nor company.
My advice - give your accountant a call, but know which car you want and find out the list price and emissions rating first, go in knowledgeable.
1) Company car - the company will get tax relief on the Capital allowances (lesser of £3k or 25% of purch price (next year £3k or 25% of "purch price less 2005 allowance"
). Also tax relief on ALL running costs (see Fuel separately below). Is a company asset, however, not your personal car. YOU as an employee will pay car tax based on the LIST price when new of the car (think there's something about >4y.o. cars being treated more leniently), but the % of the value you're taxed on is proportionate to the emissions (get a 1.1 or a clean EuroIV diesel and you'll pay tax on 15% of list; get a 540i and it'll be 35% of list). E.g. £30k car, 40% taxpayer, 20% emissions rating: £30k x 20% x 40% = £2,400 tax per year
Fuel - if the co pays for ALL fuel, YOU as emp'ee will be taxed at a flat rate regardless of how many miles you drive. Co CAN, however, reimburse you for business miles travelled...you'll have to check rates.
2) Self-purchase. Simple, you know the score there. But you can't get tax relief on any of the car expenses, neither you nor company.
My advice - give your accountant a call, but know which car you want and find out the list price and emissions rating first, go in knowledgeable.
Well, yeah - if the company pays you for business mileage, then it gets CT relief on that.
It's not quite this simple, but it boils down to tax rates and emissions - the Co. gets tax relief if co-car, but you pay tax on the co. car, so if your rate lower than CT rate, and if emissions low, then get co. car.
It's not quite this simple, but it boils down to tax rates and emissions - the Co. gets tax relief if co-car, but you pay tax on the co. car, so if your rate lower than CT rate, and if emissions low, then get co. car.
And it looks like the ability of the company to claim back Input VAT on mileage claims submitted by drectors/employees is to be abolished.
For Benefit in Kind purposes, it doesn't matter if the company owns a car outright, is buying it with a bank loan, is buying it on HP or is leasing it. The tax and NI will be calculated exactly the same way.
These things DO matter when it comes to knowing whether the company can claim the Capital Allowances on the car as a business expense or whether it claims just the finance cost element of the repayments or the full value of the repayaments as a business expense.
Also, if a company's profits are below £10,000 it pays no Corporation Tax, so looking for additional business costs or extra Capital Allowances to claim could be a waste of time.
No one said it was simple.
For Benefit in Kind purposes, it doesn't matter if the company owns a car outright, is buying it with a bank loan, is buying it on HP or is leasing it. The tax and NI will be calculated exactly the same way.
These things DO matter when it comes to knowing whether the company can claim the Capital Allowances on the car as a business expense or whether it claims just the finance cost element of the repayments or the full value of the repayaments as a business expense.
Also, if a company's profits are below £10,000 it pays no Corporation Tax, so looking for additional business costs or extra Capital Allowances to claim could be a waste of time.
No one said it was simple.
Very true Eric, and I wasn't aware of the impending Input-VAT changes! A couple of years ago my Tax advisor calculated that it is more tax efficient for me to buy my car (BMW 330) and charge the miles to my company than to have a company car. I think the IR ruling is 40p per mile for the few few thousand then it goes down 25p per mile (or some such).
Anyway, when the sums were all done it transpired that I'd be about a grand a year better off by owning the car personally.
Anyway, when the sums were all done it transpired that I'd be about a grand a year better off by owning the car personally.
I have posted a couple of things on this subject:
www.pistonheads.co.uk/gassing/topic.asp?t=158192&f=92&h=0
Paul is a good bloke and very knowledgeable about vehicle-specific tax.
Wou;d have bought me tiv this way but was just too old.
www.pistonheads.co.uk/gassing/topic.asp?t=158192&f=92&h=0
Paul is a good bloke and very knowledgeable about vehicle-specific tax.
Wou;d have bought me tiv this way but was just too old.
As Eric says, its all emission dependent. My understanding is that if the car is for business use, costs £12,000 or under, emits 120g/km or under, and the company is making a profit; then the car qualifies for a 100% write down allowence in the first year. This would let you pay for the car out of the company's profits, giving the taxman less profit to tax.
Nice !
Nice !
Essentially, low emission and electric cars qualify for 100% Capital Allowances.
However, don't ever claim capital allowances if you are, in effect, wasting them.
As I said earlier, limited companies with taxable profits of £10,000 or less pay no Corporation Tax anyway.
Capital Allowances are also, of course, available to Sole Traders and Partnerships. In this case, the £10,000 profit limit does not apply but individuals should only make Capital Allowance claims AFTER they have ensured that they have maximised other allowances first.
However, don't ever claim capital allowances if you are, in effect, wasting them.
As I said earlier, limited companies with taxable profits of £10,000 or less pay no Corporation Tax anyway.
Capital Allowances are also, of course, available to Sole Traders and Partnerships. In this case, the £10,000 profit limit does not apply but individuals should only make Capital Allowance claims AFTER they have ensured that they have maximised other allowances first.
We bought an Audi A2 1.4 tdi, CO2 emmissions 119 and a list price of about £13,500. I pay about £50 a month in extra tax, without private fuel, which is nowt at 65-70 to the gallon.
We also have a Lotus Elise which has low CO2 emissions for such a car (168).
The IR have an online calculator and the employers' CD ROM calculates it too.
We also have a Lotus Elise which has low CO2 emissions for such a car (168).
The IR have an online calculator and the employers' CD ROM calculates it too.
aceparts_com said:
OK, what about a pool car for 'everyone' to use?
There are rules about pool cars:-
- Must be for business use;
- Needs to be freely bookable by all employees;
- SHOULD be kept on the company premises overnight - exemption typically if it would cause an employee undue delay to their journey the following morning (e.g. really early start, employee lives 20 miles in the wrong direction...);
- may be others that I can't remember off the top of my head.
Pool cars are therefore typically either vans (diff't rules again), estates, or economical mid-sized saloons.
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