Company car...

Kittykat74

I am trying to understand having read the information on various websites..! Looking at possibly getting a car via my husband's Ltd company. He is the Director and earns over the 40% tax bracket, I earn considerable less.. I just do the admin (hanging on the phone to HMRC for hours) etc so I am in the 20% bracket.
The car we would like is not a gas guzzler and falls in the 140 co2 bracket (petrol). So as I understand it.. the company would pay the leasing cost (and the VAT) and the tax liability I understand if we did it in my name the additional tax would be around £116 per month off my take home salary .. is this correct?
Finally does the car have to be brand new or can it be a couple of months old eg an ex demo? Thank you for your help

sheramber

You would be better posting in the cutting tax section.

Sarastro

I spent a lot of time on this once trying to minimise tax paid and found there wasn't that much in it to be honest and in the end the fact that we could reclaim the VAT element of the lease and have the company pay for the lease rather than buying a car ourselves swung it. You also have to think about the depreciation on the car if you buy personally. And usually with leases you get things like a new set of tryes and some servicing, so all in all, it might be best to go for the lease. You do have to commit to a fixed term though and the price is determined by the number of miles you expect to do - don't underestimate the mileage as paying for excess mileage at the end can be expensive.
You don't say if you are both going to be using the car, or just you. Is it for personal and business use? Or just for business use? If you are going to say it is just for business, you will need to demonstrate to your accountant how you manage without a car for personal trips. Your accountant should be able to tell you which is the most tax efficient approach, but don't forget to factor in the wider things like the support package that goes with a lease car.

DoaM

http://comcar.co.uk/newcar/companycar/taxcalc/

Car_54

If you're looking at the overall effect on the family income, you also need to consider the costs to the company and the consequential effect on profits and hence on corporation tax.

If your husband has a limited company then he really should have an accountant whose job is to answer difficult questions like this.