Purchasing a new business vehicle - finance thoughts
Discussion
Hi All,
Hoping to get some advice here!
My CT bill is quite big this year and i fancy a new car. Looked at vans last year but stalled a little and then thought about throwing the business £ into a property. But given state of the market and interest rates, i may well stall on this again.
Been looking at EVs and tested a couple and they very much tick boxes for me in the way in which they drive, plus the range etc suits my life.
I've leased a car in the past and enjoyed driving a circa £40k car for around £300/mth (2016-2020). I was under absolutely no illusion that the car wasn't mine at the end of it, but needless to say, when it went back, that absolutely immaculate car, with nothing but a bill for the last months' rental, i was gutted.
So, this time looking for something that's a little more 'owned' by the business.
Big question is - to HP or PCP? APR looks about the same and i can afford the more expensive of the two options at both initial payment and monthly stage. As such, HP feels like the way to go. However, and i know it sounds a little odd, but a guy in the shared office complex that i have an office in has a Tesla Model 3 on PCP at the moment. He's replacing it in September with a new one on the same sort of deal and has asked why i'm not going down the PCP route. He's quite a clever cookie and his busy appears to make a good amount of ££, so i'm wondering if he's doing the right thing and not me.
Taking away the accountancy side of things, i appreciate that in 3 years time we could all be looking at hydrogen cars, or better EVs, or back to ICE even - who knows - so a PCP may well offer a better short term deal as a quicker exit strategy, but i just feel a slightly longer HP deal would give me better flexibility - in that if after 3 years i decide to swap, i can just cash in the car and settle any outstanding finance rather than be forced to change or pay a massive lump sum in 3 or 4 years time. Otherwise, if i'm enjoying the car - just stick with it.
Any thoughts?
Hoping to get some advice here!
My CT bill is quite big this year and i fancy a new car. Looked at vans last year but stalled a little and then thought about throwing the business £ into a property. But given state of the market and interest rates, i may well stall on this again.
Been looking at EVs and tested a couple and they very much tick boxes for me in the way in which they drive, plus the range etc suits my life.
I've leased a car in the past and enjoyed driving a circa £40k car for around £300/mth (2016-2020). I was under absolutely no illusion that the car wasn't mine at the end of it, but needless to say, when it went back, that absolutely immaculate car, with nothing but a bill for the last months' rental, i was gutted.
So, this time looking for something that's a little more 'owned' by the business.
Big question is - to HP or PCP? APR looks about the same and i can afford the more expensive of the two options at both initial payment and monthly stage. As such, HP feels like the way to go. However, and i know it sounds a little odd, but a guy in the shared office complex that i have an office in has a Tesla Model 3 on PCP at the moment. He's replacing it in September with a new one on the same sort of deal and has asked why i'm not going down the PCP route. He's quite a clever cookie and his busy appears to make a good amount of ££, so i'm wondering if he's doing the right thing and not me.
Taking away the accountancy side of things, i appreciate that in 3 years time we could all be looking at hydrogen cars, or better EVs, or back to ICE even - who knows - so a PCP may well offer a better short term deal as a quicker exit strategy, but i just feel a slightly longer HP deal would give me better flexibility - in that if after 3 years i decide to swap, i can just cash in the car and settle any outstanding finance rather than be forced to change or pay a massive lump sum in 3 or 4 years time. Otherwise, if i'm enjoying the car - just stick with it.
Any thoughts?
You say that you're looking at a hefty Corporation Tax bill. Purchasing any viable business asset on finance will reduce the amount of money outgoing during the financial year so the impact on CT will be less compared to paying for something in full (or paying a bigger deposit). Depending on the numbers involved, you could also be saving on your CT but get clobbered on Benefit in Kind, so you need to do your sums and check the tax implications that apply to you.
I'd apply some careful introspection and establish if the priority is to reduce your CT liability or get a car. If the former, then dump a chunk into a pension.
I'd apply some careful introspection and establish if the priority is to reduce your CT liability or get a car. If the former, then dump a chunk into a pension.
StevieBee said:
You say that you're looking at a hefty Corporation Tax bill. Purchasing any viable business asset on finance will reduce the amount of money outgoing during the financial year so the impact on CT will be less compared to paying for something in full (or paying a bigger deposit). Depending on the numbers involved, you could also be saving on your CT but get clobbered on Benefit in Kind, so you need to do your sums and check the tax implications that apply to you.
I'd apply some careful introspection and establish if the priority is to reduce your CT liability or get a car. If the former, then dump a chunk into a pension.
Thanks StevieBee.I'd apply some careful introspection and establish if the priority is to reduce your CT liability or get a car. If the former, then dump a chunk into a pension.
Bit of both really. I am in need of a new car really - so looking at EVs to try to get round huge BIK issues.
Noted re the pension - considering doing that too.
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