LTD company car lease to reduce tax

maarten

Hi, this may sound a bit vague but I am not 100% clued up on tax issues.
I am currently working as a LTD company where an accountant receives my invoice each week and tells me what the amount that is available to draw is.After I have taken my amount the remainder stays in the business bank account to cover VAT, tax, corporation tax etc. I have now been told that because my earnings have reached a certain amount that I will be liable for "personal tax?" and I should expect a tax bill at the end of the year.
I understand that I am going to have to put a sum of money aside to cover the tax and obviously would like to find a way around this. One way I have heard about is getting a lease car through the company. This would reduce my amount to draw each week and keep me below the amount that would make me have to pay the extra tax. Can you see any pitfalls with my thinking in this? If I was to follow a similar route to this would my company be able to buy/rent my car from me in a way that would reduce my available to draw amount enough to keep me below the extra tax threshold?

Pennywise

You're missing the big point which is the tax/nic on the benefit in kind on car benefit and car fuel benefit. You could end up with a bigger personal tax bill rather than smaller. Have you talked to your accountant about this option - they're the best people as they know your circumstances.

pjclar02

Hello there

You may be better placed having the discussion with your accountant, who knows in detail the numbers you are referring to.

Note that is the company leases a vehicle which is made available to you for private use, then this will be liable to personal income tax for you as a benefit-in-kind, as well as National Insurance for the company. Thus you would again be pushed into a position where you have to save personally to pay for tax.

You could just not draw out the additional money if you don't need it? Or maybe the company could make pension contributions?

chrismac1

Or you could simply have less dividends - there is a fairly long list of possible alternatives here!

maarten

I have talked this through with the accountant and she says it would be ok (although she didn't seem so keen on the idea). What other things could I do to save me from paying this tax? I have got into a situation where I can no longer claim travel and lodge as I have been in the same workplace for 2 years + and hate the thought of paying this extra tax.