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  • FIRST POST
    • huskie69
    • By huskie69 6th Oct 17, 11:56 AM
    • 23Posts
    • 2Thanks
    huskie69
    Lease car through limited company
    • #1
    • 6th Oct 17, 11:56 AM
    Lease car through limited company 6th Oct 17 at 11:56 AM
    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.
Page 1
    • huskie69
    • By huskie69 6th Oct 17, 12:03 PM
    • 23 Posts
    • 2 Thanks
    huskie69
    • #2
    • 6th Oct 17, 12:03 PM
    • #2
    • 6th Oct 17, 12:03 PM
    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
    • By Pennywise 6th Oct 17, 12:42 PM
    • 9,200 Posts
    • 16,752 Thanks
    Pennywise
    • #3
    • 6th Oct 17, 12:42 PM
    • #3
    • 6th Oct 17, 12:42 PM
    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?
    Originally posted by huskie69
    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.
    • trailingspouse
    • By trailingspouse 6th Oct 17, 5:44 PM
    • 2,266 Posts
    • 3,212 Thanks
    trailingspouse
    • #4
    • 6th Oct 17, 5:44 PM
    • #4
    • 6th Oct 17, 5:44 PM
    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.
    • motorguy
    • By motorguy 8th Oct 17, 5:49 PM
    • 15,566 Posts
    • 8,910 Thanks
    motorguy
    • #5
    • 8th Oct 17, 5:49 PM
    • #5
    • 8th Oct 17, 5:49 PM
    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.
    Originally posted by trailingspouse
    Same here. Thats what i've been told. I just claim the 45p per mile.
    You are not special. You are not a beautiful and unique snowflake.
    • phill99
    • By phill99 8th Oct 17, 7:33 PM
    • 7,981 Posts
    • 7,221 Thanks
    phill99
    • #6
    • 8th Oct 17, 7:33 PM
    • #6
    • 8th Oct 17, 7:33 PM
    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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