Lease car through limited company

I've recently started a limited company which currently brings in between ~£300-£500 per month. I'm not VAT registered. I'm a Director of the company but not an employee - the company owes me about £2k which will be paid to me as an when it can afford to do so. I'm not "employed" by the company and if and when it ever turns a profit, I'll pay myself in dividends.

I also work full time earning ~£40kpa.


I'm currently without a car after my beloved fuel guzzling Skoda decided to die and I'm looking at my options. I've awlays been put off with leasing up to now...

I'm considering something like an Audi A4 - not sure what the list price is, maybe £27k? Monthly payments would be about £180 per month so within the realms of what the company could afford to pay.

Is this a cost effective option? As I'm not employee - how would the benefits in kind be worked out (would I need to become an employee to use the car?). Additionally, I'd also use the car more for my own purposes than the business - about 10000 miles commuting to my primary employment, how does this affect the scenario?

TIA
Huskie.

Comments

  • huskie69
    huskie69 Posts: 41
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    As an example, I've found this:

    http://www.yes-lease.co.uk/business-lease-cars/audi/a4-estate/a4-avant-14t-fsi-s-line-5dr-leatheralc-278449251

    At the finance details section, it provides BIK info - in this instance, as a lower rate tax payer, the BIK is £131.85 pcm - does this mean that on top of the money the business pays for the car. I also have to pay a personal liability of £131.85 pcm from my own finances to cover the tax costs?
  • Pennywise
    Pennywise Posts: 13,468
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    huskie69 wrote: »
    As an example, I've found this:

    http://www.yes-lease.co.uk/business-lease-cars/audi/a4-estate/a4-avant-14t-fsi-s-line-5dr-leatheralc-278449251

    At the finance details section, it provides BIK info - in this instance, as a lower rate tax payer, the BIK is £131.85 pcm - does this mean that on top of the money the business pays for the car. I also have to pay a personal liability of £131.85 pcm from my own finances to cover the tax costs?

    Yes. You will have a personal tax liability on the benefit in kind value for both the car and fuel if the company pays for the fuel too. The company will also have a national insurance liability on the same benefit in kind values. The company would also have to register as an employer and submit PAYE returns to HMRC including end of year P11d.

    Most people don't have company cars for their own companies for this very reason. Very easy for the tax/nic on the benefit in kind to be higher than the tax saved by the company by putting through the costs as a company expense.

    You'd have to do the sums and also be realistic about your options. If you're dead set on that car, and will buy it either way, then you have a clear choice of the costs via a ltd as opposed to costs via private (incl personal tax on removing profits from the co to pay for it privately, set against the company being able to pay 45p per mile to you personally for business use).

    But, if you're only looking at that car because of the company lease option, and your alternative would be an older/cheaper car if you bought privately, then you're not comparing like for like and the comparisons and number crunching get even more complicated.
  • I run a limited co, and we've always been advised that a lease car isn't worth the bother.

    We buy our cars as private individuals, and then pay ourselves 45p per mile (for the first 10,000 miles and 25p thereafter) for business miles travelled.
    No longer a spouse, or trailing, but MSE won't allow me to change my username...
  • motorguy
    motorguy Posts: 22,452
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    I run a limited co, and we've always been advised that a lease car isn't worth the bother.

    We buy our cars as private individuals, and then pay ourselves 45p per mile (for the first 10,000 miles and 25p thereafter) for business miles travelled.

    Same here. Thats what i've been told. I just claim the 45p per mile.
  • phill99
    phill99 Posts: 9,094
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    You need to also get your head around the relationship of the company. Although a Director, you are also classed as an employee.
    Eat vegetables and fear no creditors, rather than eat duck and hide.
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