Company Car Questions

skyjumper

Hi guys,

I'm the director of a one man Ltd Company and use my private car for all the biz trips. In the past 2 years, i have done approximately 12k miles out of which 10k is solely for Biz purposes only. the other trips has had dual purposes e.g. going to the bank( for the biz) but picking up groceries on the way back. so these trips( which amount to nearly 2 k), i haven't put as biz trips.Now I have been doing the 40p/mile version for the past 2 years.

My car which is nearly 10 years old needs frequent servicing and the mileage is not the best, esp during these hard times.

I would like to get a new car and wondering the best options -
1. get a second hand car - privately and continue to do the same as above
2. get a New car - approx value 20k, with petrol/hybrid, CO2 89gm ( yes u guessed it right- it's the new Toyota Pruis with a good 72mpg)- as a Company car.

Please advice what my best option would be - I did ask my accountant last year and he was not very keen on this, so pls be kind and give ur opinions

Please Note: We also have a family car which my wife uses,which is more fuel efficient and spacious than my own car and we use this most of the times, as the child seats and prams are in it all the time.Also use this car for any long family trips and the weekly supermarket shoppings.

thanks for reading and any suggestions really appreciated.

gibbyni

Were in the same boat as you, after doing all the calculations we decided that the 40p per mile way worked out better. We also do around the 10k mile so works out around £4k tax free in out pocket.

It would be nice to get a big new car but, couldn't see any big upside to getting the Ltd to buy it. The £4k in our pocket gives us better options for our car.

skyjumper

Thanks gibbyni,

thanks for that speedy reply.
the dilemma we are facing is that

I spent around £140 on petrol- 1680 (for 12 months)
2 sevices( repairs) (450 + 575) 1025 (until now this year )
MOT 50
Tax 170

Total 2925

I use a independant guy for my services and he informed me that my cat. converter is in its last few days and replacing that would be another 800 plus labour charges- which might come to around 1000. so there goes the £4000 i would get.and the car has done around 145k until now and i trust this guy as he has been doing the servicing for ur car and also family and our friends and no one has ever had any problems with him.

gibbyni

If the business can afford 20k for the car it may be worth it, I would assume it would be leased or on finance of some sort. The way we worked it out was take your last years accounts (if there going to be similar to this years). Now take away your mileage payments and add in the lease, petrol, and all the other car payments. Work out then what your Ltd profit would have been, and in turn the difference in the tax the Ltd would have paid.

Next do the same but for your own tax return, I used these calculators http://cccfcalculator.hmrc.gov.uk/ to work out the extra tax that was due.

When I did my calculations i was paying about an extra £400-£500 in personal tax and about the same in lost profit from the Ltd to go from a 5 year old Laguna to a brand new Megane.

Really work through your figures. Ask yourself do you need a 20k car? ( remember a 20k car on finance is going to cost more than 20k) can the business afford the extra expense? can you afford the extra expense?

Were just going to wait another year and buy a 1-2 yo car out of our own pocket and the 40p per mile should pay it off in a few years

The car tax calculator wont work for me at the min but this is the main page its found on http://www.hmrc.gov.uk/calcs/cars.htm