Company car or not?

missile

Hi Jimmo,

Many thanks for your post, you have given me more to think over.

My wife has income from savings which I have not mentioned.
I started this business to carry out some part time work for six months and it has turned out to be more than anticipated.

I would suggest small businesses are the lifeblood of UK plc. I don't understand why you would have this attitude

I would come down on you like a ton of bricks

.

eande

I think that Jimmo has given you some very useful advice - you really need to work through the different scenarios (owning within the company/outside) over a 2/3 year cycle - the answer will be unique to you in terms of your car choice (co2), tax status, actual business mileage.

I would also add that whilst there are many insurance companies who offer business cover, there are not that many who offer cover where the policy holder is a Ltd company (and those that do tend to charge a higher premium than if the policy was in your own name). Bear this in mind, if it turns out that there's nit much difference between owning inside/outside the company.

smala01

Jimmo - thanks for taking the time for detailed replies to the OP. Your answer made me rethink some of my own tax planning.

Smala01

CKhalvashi

missile wrote: »

Agreed, I should have thought about this earlier.

It would be my intention to sell the Audi TT to the company. My wife is company secretary and a director. Her taxable income is circa £4,000 pa. Please be advised, the current list price is £25,320 and we purchsed it second hand in June 2011 for £20,000.
I calculate car benefit charge would be £5,561.00 giving us a tax liability @ basic rate of £1,130.20

I calculate this would reduce our company corporation tax bill by £4,200. When we come to sell the car the company would take the hit on depreciation against pre tax income.

It does not seem so attractive to sell my own vehicle to the company as I would no longer be able to charge the company mileage for business use, circa £1,000 per month.

I’m going to step in and be a little difficult here.

If you’re at £40k, then you’re looking at £40-ish tax/NI + about £3,000 over the basic limit.

If you sell the car to your company, you’re effectively then paying tax in the P11D value, which in the case of our company cars (mine is my own, and some staff are cottoning onto this also, ordering through us, then replacing with orders that go in), the P11D value is around 40% more than we’re paying for them new.

This will leave an extra 40% on top of what I can claim back.

In my humble opinion, and as someone that cottoned onto the tax situation of this when we went Ltd, you’re best off keeping the car in your own name, then claiming tax relief on mileage.

Doing maths (assuming a 20% tax rate), you’re looking at £5,000+FB to save £4,000. I would post more accurate figures, however on iPad and phone is in kitchen, laptop is in car (which has black windows, before anyone says something).

Chris