Can a company car help?

aaz01

I work for a family business. Healthy income providing a VAT exempt service.

I usually get my car as a personal lease. My car is due to be returned soon and I was just wondering if there's anything that can be done through the business to save costs?

I do use it for work, but very little. Mostly personal.

As a business we've never supplied any employees with cars before so we don't really know what can be done.

molerat

How do you currently get re-imbursed for car use ?  Car allowance, business miles ?  The admin of providing a company car can be quite a burden - how many cars - would you lease or buy ?  What about the personal tax you will pay for having the car ? Electric car ? That comes under a completely different tax regime.

A couple of reads

https://www.moneydonut.co.uk/tax/payroll-and-benefits/company-cars-and-tax

https://www.nextgreencar.com/company-car-tax/employer-costs/

Grumpy_chap

Best to ask your Accountant.

oldbikebloke

gut reaction, company car tax is there to make it highly unattractive for owner managed busienss as part of their own personal tax efficiency

add in that you use the specific words Vat exempt supplies, so your business cannot recover vat on costs, then I would say that the company paying for a vehicle, even a low tax (for now) electric one, will be inefficient compared to doing it from your own post tax personal earnings

but as said, get your account ant to do an exact calculation for your own full circumstances as there are many personal factors to be considered 

Grumpy_chap

I would have thought a zero BIK electric vehicle would be beneficial as a company car for Director of privately owned business.  As I understand it:

• No VAT reclaimable on purchase (but could be partial reclaim on lease)
• Vehicle purchase from earnings before any tax paid and (I think) 100% first year write down, so no corporation tax either
• No BIK

Are they still the rules?
The other option that has a tax-dodge is a twin-cab pick up.

Grumpy_chap

This post from another recent thread explains the BIK for a commercial vehicle (includes twin-cab) which is a flat-rate and lower than many company car options:

Jeremy535897 said:

See https://www.autoexpress.co.uk/vans/95748/double-cab-pick-up-truck-tax-benefits-explained

I note the article comments that the benefit assumes you are an employee and not a company director - I do not know how that varies if you are Director or your own Ltd Co (when you are an technically employee also).

I also found a similar article confirming the BIK for all electric company car, which confirms currently zero, but rising to 1% nexct year:
https://www.autoexpress.co.uk/car-news/107394/electric-cars-exempt-from-company-car-tax-next-year