Company car tax

[harpo_72]

I am looking at the rules on BIK and I see an advantage for going full electric on my next vehicle.
But I am not sure whether there are other hidden costs if I purchase the vehicle via the family business. Currently we run a private car and claim mileage back on that when needed. We don’t do huge mileages so we have never seen the point but given the regulations brought in from April 2020 should we reconsider ? Would it be a way of getting money out of the business in a tax efficient way? Would it be offset against the profit and loss account and be seen as an expense?

 

[pool888]

Are you a limited company or a sole trader / partnership??

 

[harpo_72]

Limited company, as an employee or director

 

[Deleted member 21258]

Basic summary is :-

Full electric is very cheap from a BIK & class 1a NIC point of view.

Some hybrids are good as well.

Commercial vehicles/vans are good.

Some hybrids are not good, all depending on electric range/emissions.

Petrol/diesel cars are really high by way of BIK/NIC, so normally would be owned privately with business mileage claimed. As the tax/nic payable can be greater than the corporation tax relief available and maybe cheaper drawing the amounts out via dividends/salary/business mileage.


If a company vehicle, then the company will get tax relief on the company vehicle expenses(the method given, will varying depending on how you are buying/leasing it), and you will receive a BIK & the company gets a Class 1a NIC bill.

Hope that helps.

Lots of reasons why the above may not be true in all situations tho, so tbh best speak to your company accountant.

 

[harpo_72]

I think the electric is the way forward, we just don’t do the miles but if we do they are work miles mainly .. just wasn’t sure whether I was just being hopeful.
I will ask our accountant and see what he says as the boy is getting larger and the old car is getting less reliable and is incurring service /mot costs

 

[larmen]

Have a look at the most recent episode of the fully charged show on youtube.
While I have no idea about company cars they went exactly through that and explained it fairly well.

 

[harpo_72]

Have a look at the most recent episode of the fully charged show on youtube.
While I have no idea about company cars they went exactly through that and explained it fairly well.

Yes that got me thinking... but a Tesla 3 lease is £630 + ... which is a bit rich for me. I like the new skoda electric coming out, wife won’t because it’s a skoda

 

[Bunkermagnet]

Yes that got me thinking... but a Tesla 3 lease is £630 + ... which is a bit rich for me. I like the new skoda electric coming out, wife won’t because it’s a skoda

Tell her if she wants to take it up the chuffer, she can have one with a Seat,VW or Audi badge if shes that bothered Sadly they dont want to do one with a Bently or Lambo badge

 

[harpo_72]

Tell her if she wants to take it up the chuffer, she can have one with a Seat,VW or Audi badge if shes that bothered Sadly they dont want to do one with a Bently or Lambo badge

I always wondered why seat, VW and Audi drivers looked a little... uncomfortable

 

[pool888]

https://www.greencarguide.co.uk/electric-cars/electric-car-tax-benefits/

100% tax write off in first year if you purchase outright (you still have to pay when vehicle is sold).
1% BIK this year then 2% for next 3 years.
Zero road fund tax and zero luxury car tax £40K+

 

[pool888]

Limited company, as an employee or director

Will definitely make financial sense then compared to a petrol/diesel. You will cut a huge amount off your first year tax bill and the costs to run an EV are negligible compared to petrol/diesel if you can charge at home with an EV tariff such as Octopus Go (cheap electric 5p Kw/h so 1p-2p per mile depending on car, no road fund license, no luxury car tax, minimal servicing as no engine oil, filters etc.). Check charging options on any long distance routes you regularly go as the charging infrastructure is the main obstacle just now, hence why Tesla is so popular it's as much for the excellent fast reliable Supercharger network as it is the car. It's something you don't need to give a second thought about with petrol/diesel but is important with EV, although hopefully over the next few years it will become less of an issue.

 

[PJ87]

Yes that got me thinking... but a Tesla 3 lease is £630 + ... which is a bit rich for me. I like the new skoda electric coming out, wife won’t because it’s a skoda

Have a look at the Kia e niro or hyuandi Kona

Skoda one looks lovely

Skoda make great cars

Asks if she wants an Audi if yes just say it's same thing diff bag stop being so judgy lol

 

[harpo_72]

Have a look at the Kia e niro or hyuandi Kona

Skoda one looks lovely

Skoda make great cars

Asks if she wants an Audi if yes just say it's same thing diff bag stop being so judgy lol

She worked in PR and marketing.. total brand snob, I tell her Audi is Skoda etc I even told her that the Ferrari 360 Modena has switches from the Fiat punto of the era .. Porsche Macan is a Q5 with a bigger anti roll bar but they kept the VW polo switches .. none of this matters it’s just the name .. I have never owned a Benross driver but have had a Ram Ti one ? .. I have looked at the other brands ( here is a hilarious thing my wife liked her Hyundai coupes when I met her, yes they looked okay but 136bhp out of a 2ltr is pooh- so I need to explain if Hyundai is acceptable so should Skoda)

 

[pool888]

If you have the cash available to buy outright at least consider a Model 3 SR+, a fraction over £40K but the residuals are fantastic so I think it will likely work out much cheaper over the term than a lease. Not guaranteeing that will still be the case in a few years time when they're more commonly available but historically EV's have kept value well over the last few years compared to petrol/diesel cars. Cheapest used SR+'s on Autotrader are still asking £37K.

 

[harpo_72]

If you have the cash available to buy outright at least consider a Model 3 SR+, a fraction over £40K but the residuals are fantastic so I think it will likely work out much cheaper over the term than a lease. Not guaranteeing that will still be the case in a few years time when they're more commonly available but historically EV's have kept value well over the last few years compared to petrol/diesel cars. Cheapest used SR+'s on Autotrader are still asking £37K.

It’s the over 40k thing , it’s a bit of a silly cut off point but the car manufacturers haven’t really reacted to it. So it’s a stealth tax for the customer

 

[pool888]

It’s the over 40k thing , it’s a bit of a silly cut off point but the car manufacturers haven’t really reacted to it. So it’s a stealth tax for the customer

But there no over £40K luxury tax on a pure EV unlike petrol/diesel/hybrid which have the extra £325 to pay for 5 years, so that is a saving of £1625 compared to non EV's, and that's on top of the £750 saving for road tax (or £700 for hybrid).

 

[PJ87]

But there no over £40K luxury tax on a pure EV unlike petrol/diesel/hybrid which have the extra £325 to pay for 5 years, so that is a saving of £1625 compared to non EV's, and that's on top of the £750 saving for road tax (or £700 for hybrid).

I never realised this until last week

Brings telsa into play next time

 

[harpo_72]

But there no over £40K luxury tax on a pure EV unlike petrol/diesel/hybrid which have the extra £325 to pay for 5 years, so that is a saving of £1625 compared to non EV's, and that's on top of the £750 saving for road tax (or £700 for hybrid).

Ah I thought the £40k was a sweeping tax irrespective of vehicle power unit ... now this makes it more appealing

 

[Captainron]

I’m looking at a plug in Hybrid at the moment to save on tax.

Skoda Superb estate is my choice