Discussion
Does any one know much about tax and pool cars?
Hypothetical situation:
A small vat registered limited software dev company (2 people, both in the 40% tax bracket), thinking about getting a Subaru Impreza WRX under contract hire. Both of the people work from home (i.e. No office yet, although this might change). Insure the car so both people can use it, but one person ends up using it all the time (and accidentally does personal mileage in it).
Would this be a viable situation?
Hypothetical situation:
A small vat registered limited software dev company (2 people, both in the 40% tax bracket), thinking about getting a Subaru Impreza WRX under contract hire. Both of the people work from home (i.e. No office yet, although this might change). Insure the car so both people can use it, but one person ends up using it all the time (and accidentally does personal mileage in it).
Would this be a viable situation?
3 years ago there was a very low threshold on what constitutes company car usage (something like 8 days of the year). If you go over this, you can pay tax...
ie this company car is likely to be taxed against both drivers.
Not sure what the law is now, obviously things have moved from mileage to CO2 emmissions.
ie this company car is likely to be taxed against both drivers.
Not sure what the law is now, obviously things have moved from mileage to CO2 emmissions.
What are you trying to claim -
Input VAT on cost of vehicle?
Input VAT on Contract Hire Chrges?
Capital Allowance on vehicle as a Motor Car?
Capital Allowances on the vehicle as a Commercial Vehicle/Plant and Machinery?
Input VAT on running costs?
Running costs as a deduction against trading income?
Is your operation run as a limited company?
Are you both directors/employees?
Is the car being purchased/hired by the business?
A pool car generally has no private use element at all. Running the business from home makes it very difficult to convince an inspector of taxes that there is no private element attached to the vehicle.
>> Edited by eric mc on Tuesday 9th September 16:26
Input VAT on cost of vehicle?
Input VAT on Contract Hire Chrges?
Capital Allowance on vehicle as a Motor Car?
Capital Allowances on the vehicle as a Commercial Vehicle/Plant and Machinery?
Input VAT on running costs?
Running costs as a deduction against trading income?
Is your operation run as a limited company?
Are you both directors/employees?
Is the car being purchased/hired by the business?
A pool car generally has no private use element at all. Running the business from home makes it very difficult to convince an inspector of taxes that there is no private element attached to the vehicle.
>> Edited by eric mc on Tuesday 9th September 16:26
eric mc said:
Input VAT on Contract Hire Chrges?
Input VAT on running costs?
Running costs as a deduction against trading income?
yes, obviously our accountant would have final say about it all(but as he charges the earth I just want to get a rough idea if its possible).
I basically just want to minimize the tax liability for both the individuals and the company.
We looked into this a few years back and found a potentially neat little way round the tax issue.
The idea was to buy a decent classic (Ferrari 308, Porsche, etc) and use it for client incentives/entertainment...... "why don't you take the Ferrari for the weekend to think about our proposal Mr Potential Client"....(it's amazing how many wives/girlfriends would have suddenly become potential clients!!!!)
We would have also let an "employee of the month" have use of it too.
As I recall, providing a certain mileage was not exceeded and certain other conditions met, then it would be classified as "enteratinment".
This was a few years back so legislation may have changed but might be worth looking into. We didn't do it as money was, at the time, better spent else where.
The idea was to buy a decent classic (Ferrari 308, Porsche, etc) and use it for client incentives/entertainment...... "why don't you take the Ferrari for the weekend to think about our proposal Mr Potential Client"....(it's amazing how many wives/girlfriends would have suddenly become potential clients!!!!)
We would have also let an "employee of the month" have use of it too.
As I recall, providing a certain mileage was not exceeded and certain other conditions met, then it would be classified as "enteratinment".
This was a few years back so legislation may have changed but might be worth looking into. We didn't do it as money was, at the time, better spent else where.
Playing tricks with the Revenue is not appreciated. They are not dumb (did you see University Challenge last Monday?). I had a similar case revolving around the use of a yacht for "incentive" purposes which elicited a rather irate response from the Inland Revenue. In the end a compromise was reached. The problem with Motor Cars is that there are very specific Inland revenue definitions and restrictions set out in the tax legislation - which is not the case for yachts.
When we looked at this, I ran a Merc CLK as a company car and paid heavily for doing so!
We ended up buying a double cab pick up, without a truck top, so we were able to:
a) Recover the VAT on the vehicle, the running costs etc.
b) By keeping receipts for personal fuel, there is no benefit here.
c) By using it a a 'pool' car by certain employees to use, there is no benefit here either.
But the laws are constantly changing so do get advice from your accountant.
You could still possibly go the classic route as say an E-type list price when new could be a major help, or maybe get a motorcycle as your company vehicle and argue the car as still a pool car.
Again, I could be talking boll**ks, so get advice!
We ended up buying a double cab pick up, without a truck top, so we were able to:
a) Recover the VAT on the vehicle, the running costs etc.
b) By keeping receipts for personal fuel, there is no benefit here.
c) By using it a a 'pool' car by certain employees to use, there is no benefit here either.
But the laws are constantly changing so do get advice from your accountant.
You could still possibly go the classic route as say an E-type list price when new could be a major help, or maybe get a motorcycle as your company vehicle and argue the car as still a pool car.
Again, I could be talking boll**ks, so get advice!
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