Receiving an old Company Car (free?)

kidmugsy

sheramber wrote: »

When my husband's company offered him the chance to buy his old company car they said they would send it to auction but arrange with the auctioneer to sell it to him.

How does the auctioneer manage to sell it to someone who isn't the highest bidder?

Mangle

So, lets say the car is "worth" £6,000 now as a second-hand value. If the car was given to me (I pay zero for it) I would receive a tax bill based on a BIK of £6,000? But if I pay the full £6,000 for it, I get no BIK issues? Is that about right in simple terms?

00ec25

Mangle wrote: »

So, lets say the car is "worth" £6,000 now as a second-hand value. If the car was given to me (I pay zero for it) I would receive a tax bill based on a BIK of £6,000? But if I pay the full £6,000 for it, I get no BIK issues? Is that about right in simple terms?

exactly right, and I know which I'd choose

6,000 x 40%

[Deleted User]

Mangle wrote: »

So, lets say the car is "worth" £6,000 now as a second-hand value. If the car was given to me (I pay zero for it) I would receive a tax bill based on a BIK of £6,000? But if I pay the full £6,000 for it, I get no BIK issues? Is that about right in simple terms?

It is correct! However the company could not write the car off at 'zero value' when it has a value of £6000! The company would pay additional corporation tax on the £6000!

Wookey

The company valuation at zero is probably down to it's allowances since new and it is now at the point where the accountant can no longer claim a % of its value against tax, that has no bearing in what it is worth on the open market.

kidmugsy wrote: »

How does the auctioneer manage to sell it to someone who isn't the highest bidder?

Whose to say it would be put up for open auction, slightly underhand but an auction receives a car in, which is sold beforehand so never gets listed, auction occurs and the car sale appears in at the close of business for whatever it was privately sold for, regular punters would never see the paperwork so would be clueless as to what has happened.

A log would show what was sold and how much for and that would be as deep as a random inspection would ever need to show, it would be a lot more closely scrutinized with a tax investigation though.

[Deleted User]

Wookey wrote: »

The company valuation at zero is probably down to it's allowances since new and it is now at the point where the accountant can no longer claim a % of its value against tax, that has no bearing in what it is worth on the open market.

Exactly my point - the op appears to believe that, because it has been written down to zero (or almost zero), that is the value for tax purposes regardless of its actual value.

Mangle

Basically, I'm no accountant. Electrical engineer, and that's hard enough! Boss just said that the car had zero value on the company books, and he would let me have it for free. However, Accountant pointed out that there are tax implications. Started to wonder how to get the car in the most economic way, without tax issues. Looks like I need to pay some money, it's no going to be a freebie! Booo!

jimmo

Don't think you are thinking this through properly. Your boss has offered to give you a £6000 car If you accept the gift you will pay tax on it. If you are a 20% taxpayer it will cost you £1200. If you are a 40% taxpayer that would be £2400. Even if you are a 40% taxpayer that's an incredible bargain, provided of course, that you want a 6yo BMW.
If you paid your boss £6000 for the car and the car has truly been written down to Nil for tax purposes then, one way or another, your boss is going to end up paying tax on that £6000.

Either accept your bosses gift and take the tax hit yourself or decline.