Cheapest way of owning a company car

jonnytekno

Hi there,

I am the MD of a company which is, at the moment, only me. I need a car and am trying to figure the best way to do it at little or no cost to me personally (appreciate it needs to cost the business something)

I need it for business use and will not use it for personal reasons in theory, although it will be tempting to pop on errands occasionally if say my wife is out in our other car (I can't use that car because my wife commutes to work in it and drops/collects our kids). If I had to ban myself from using it for personal reasons I could probably do that. I would not commute normally to work in it, so it would mostly sit in the drive of my house, but I would drive to meetings in it at least twice a week I reckon.

I looked into giving myself a company car, but the tax I would personally pay is so high it would be cheaper for me to just personally lease a car.

I'm assuming 'the business' could lease a car, which I would drive, but then it seems I would have to ban personal use to avoid any personal tax liability, but also not sure if it is OK for that car to be kept at my house?

Alternative I guess is to pay myself a car allowance, but not sure of the tax implications of that?

This is as far as I have got - anyone know how all this works?

Thanks,

DoaM

Use taxis, and claim the fares as business expenses? (The best answer may not necessarily relate to the question asked).

motorguy

Claim back the miles at 45p a mile.

jonnytekno

DoaM wrote: »

Use taxis, and claim the fares as business expenses? (The best answer may not necessarily relate to the question asked).

I already do that + trains, but the overall cost is high and it's not that convenient as have clients in random places. Ultimately I am trying to save my business money.

spadoosh

Taxis or a £500 banger are going to be the best ways to save your business money. Conversely to save your business money, make sure the employee use their own vehicles... ahh.

This forum isnt the taxman, what do you really want?

jonnytekno

spadoosh wrote: »

Taxis or a £500 banger are going to be the best ways to save your business money. Conversely to save your business money, make sure the employee use their own vehicles... ahh.

This forum isnt the taxman, what do you really want?

I want a) a car which I will 98% use only for business travel, b) it not to cost me personally anything (either directly or in tax) and c) for it to be cheaper or about the same on my P&L than me using public transport and taxis, which can be in the region of £700-800 per month at the moment.

me paying myself more salary in order to take a personal car lease is an option

motorguy

jonnytekno wrote: »

I want a) a car which I will 98% use only for business travel, b) it not to cost me personally anything (either directly or in tax) and c) for it to be cheaper or about the same on my P&L than me using public transport and taxis, which can be in the region of £700-800 per month at the moment.

me paying myself more salary in order to take a personal car lease is an option

Surely the answer is buy yourself a car then claim back all miles @45p a mile.

That will cover the costs of the car for you and be cheaper for the business.

engineer_amy

buying or leasing a car through the business will cost both the business and you. Since you say 98% business use, this implies 2% personal use so will be classed as a benefit in kind. This will then affect your tax code, the company will have to pay additional national insurance on the value of the benefit in addition to the car cost, the insurance, tax, servicing etc.
Not declaring it properly and then being found out could result in some hefty penalties.
the cheapest way would be to pay yourself more and sort out the car yourself, then claim 45p mileage for work related journeys. you are then free to use the car for personal things as much as you wish

uknick

Cheapest for you; buy a van which you can be kept at home without any BIK implications. You can even have "insignificant" personal use of it without attracting BIK charges.

https://www.gov.uk/expenses-and-benefits-company-vans/whats-exempt

But, as said, if you want a car, there will be BIK implications unless the car is left at your business premises outside business hours. Having said that, if you work from home, it would be an interesting conversation with HMRC as to whether it qualifies as a "pool" car. Which I think you'd probably lose without concrete evidence there was no personal use.

AdrianC

Ask your accountant. He knows the precise details of your tax situation, so can tailor his advice.

Jonesya

Cheapest option is probably an old, cheap car and claim mileage - but I guess you know that if you're running a business.

If you want something a bit nicer, or a bit flash, then consider something with a low BIK tax rate - electric vehicles are going to see a big cut in their BIK rates next year.

Get yourself a nice EV next year, Tesla 3 is now out which has a decent range:

https://www.goultralow.com/company-cars-and-fleet-vehicles/tax-benefits/