Company EV costs increasing - sell to myself?
Discussion
I was just looking at how the BIK on my company EV is ramping up over the coming years and I'm wondering if it's about to reach a tipping point where the costs are more than the savings.
It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
I'm just here to watch for the answer.
However i assume your mileage for business would be a consideration. If you do lots of miles and the cars in your ownership you get to bill your company for mileage.
On an older car with low running costs such as an EV I would assume theirs profit to yourself in this.
However i assume your mileage for business would be a consideration. If you do lots of miles and the cars in your ownership you get to bill your company for mileage.
On an older car with low running costs such as an EV I would assume theirs profit to yourself in this.
Same boat, RRP is 89k for our EV.... It's still probably cheaper when you account for insurance and extended warranty out of your own pocket?
I am debating whether to sell it next year and get a commercial vehicle again (not a pickup now though as had one of those previously when BIK was low)..
I wonder if the EV could be a pool car and the commercial listed on my BIK.. Would just use the EV specifically for business use rather than personal and business..
I am debating whether to sell it next year and get a commercial vehicle again (not a pickup now though as had one of those previously when BIK was low)..
I wonder if the EV could be a pool car and the commercial listed on my BIK.. Would just use the EV specifically for business use rather than personal and business..
Silverage said:
I was just looking at how the BIK on my company EV is ramping up over the coming years and I'm wondering if it's about to reach a tipping point where the costs are more than the savings.
It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
Yes you’re missing the 100% tax write off and subsequent reduction in profit. How that adds up is an individual thing but for myself it was very much worth it. It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
DSLiverpool said:
Silverage said:
I was just looking at how the BIK on my company EV is ramping up over the coming years and I'm wondering if it's about to reach a tipping point where the costs are more than the savings.
It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
Yes you re missing the 100% tax write off and subsequent reduction in profit. How that adds up is an individual thing but for myself it was very much worth it. It was £42,000 when the company bought it new 4 years ago, so this year it's £1260, then £1680 in 26/27 and then £2100 in 27/28 and so on.
Against this, the company pays all the running expenses and it gets the VAT back on them. Obviously if I went back to a private car I'd be paying those expenses (including VAT) from taxed income.
I'm considering selling the car to myself, which I assume I can do at fair market value. The company initially received a 100% corporation tax write down on the purchase price and I know whatever the car sells for would be classed as taxable profit, but I'd probably just send this off to my pension so that would be tax neutral.
Am I missing anything here?
In your calculation above, you're also not accounting for the reduction in profit form insuring and maintaining your car through the business and the resulting saving in corporation tax.
I've got a 6 year old £56k EV that currently has a market value of £14k.
I'm still keeping it in my business this year despite the increase in BIK because total running costs (tyres/maintenance/tax/insurance) average around £2k per year and this year's BIK will be £1680.
The BIK £1680 is added to my taxable income and I pay 40% of that. i.e. £672, which is less than I'd pay in tax if I took £2k of running costs out of my company.
If running costs stay the same, I reckon I can keep the car in the company for at least another 2 years before selling it to myself for <£10k and taking the hit on corp tax.
I've got a 6 year old £56k EV that currently has a market value of £14k.
I'm still keeping it in my business this year despite the increase in BIK because total running costs (tyres/maintenance/tax/insurance) average around £2k per year and this year's BIK will be £1680.
The BIK £1680 is added to my taxable income and I pay 40% of that. i.e. £672, which is less than I'd pay in tax if I took £2k of running costs out of my company.
If running costs stay the same, I reckon I can keep the car in the company for at least another 2 years before selling it to myself for <£10k and taking the hit on corp tax.
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