Company Car Tax - Fully deductible from Corporation Tax?

MoneySpendingExpert888

I currently have a ltd company which has a positive turnover, and was reading some articles regarding company cars as i am currently looking to change my own personal car.

I was looking to lease through the company a BMW 330e as i believe with this hyrid model as it is under 85g/km in emissions that you can claim the entire lease cost off your corporation tax bill? But as i will also be using it for personal use then only able to claim back 50% of the VAT (we are VAT registered).

I keep myself within the 20% tax bracket so my overall BIK over 3 years would only be around £2,870 and if correct the company wouldnt be paying out anything for the car as the lease gets fully deducted off the corporation tax.

At the moment i am currently using my car for about 50% business and 50% personal and would most likely be the same if getting a car through the company, i wouldnt be doing super high milage either so wont be needing to go via the company petrol card or private fuel route.

Just wanted to check to see if i have got this correct before i even consider looking at deals etc. Obviously if the full cost of the lease wasnt to be able to be claimed back then i most likely wouldnt consider this route as i am the main shareholder in the company and any money that comes out of it is esentially coming out of my own pocket.

Many thanks for any advice given.

Car_54

MoneySpendingExpert888 wrote: »

I keep myself within the 20% tax bracket so my overall BIK over 3 years would only be around £2,870 and if correct the company wouldnt be paying out anything for the car as the lease gets fully deducted off the corporation tax.

That sounds too good to be true. I think you'll find that the full cost of the lease is allowed as a cost against the company's taxable profits, not the corporation tax. The saving is 20% of the leasing cost, not 100%.

neilmcl

MoneySpendingExpert888 wrote: »

I currently have a ltd company which has a positive turnover, and was reading some articles regarding company cars as i am currently looking to change my own personal car.

I was looking to lease through the company a BMW 330e as i believe with this hyrid model as it is under 85g/km in emissions that you can claim the entire lease cost off your corporation tax bill? But as i will also be using it for personal use then only able to claim back 50% of the VAT (we are VAT registered).

I keep myself within the 20% tax bracket so my overall BIK over 3 years would only be around £2,870 and if correct the company wouldnt be paying out anything for the car as the lease gets fully deducted off the corporation tax.

At the moment i am currently using my car for about 50% business and 50% personal and would most likely be the same if getting a car through the company, i wouldnt be doing super high milage either so wont be needing to go via the company petrol card or private fuel route.

Just wanted to check to see if i have got this correct before i even consider looking at deals etc. Obviously if the full cost of the lease wasnt to be able to be claimed back then i most likely wouldnt consider this route as i am the main shareholder in the company and any money that comes out of it is esentially coming out of my own pocket.

Many thanks for any advice given.

Speak to your accountant, this is precisely what you pay him/her for.

ComicGeek

Car_54 wrote: »

That sounds too good to be true. I think you'll find that the full cost of the lease is allowed as a cost against the company's taxable profits, not the corporation tax. The saving is 20% of the leasing cost, not 100%.

This - you're massively overestimating the tax benefits here, otherwise everyone would be doing this. Over 130g/km 15% of the expense isn't deductible for tax purposes, so there isn't a significant benefit for the lease cost of the lower emissions.