Car for business

mrkjd

I am an self employed electrician who does agency work on work sites. I need to replace my car which is an estate for my work tools etc. With second hand prices so high I’m struggling with options around £8k as a “normal” purchase. Can anybody give me any advice on purchasing a car as a work vehicle through my company? Would it allow me to spread payments? My credit history is not great so personal loan options are limited.

Grumpy_chap

For anyone to provide clear advice, you will need to be certain on your employment status.  Are you:

• Employee?
• Contractor (inside IR35)?
• Contractor (outside IR35)?
• Within the CIS regime?
• Self employed = sole-trader
• Director of own Ltd Co.?

Your thread a couple of days ago indicated you are an employee, but the question above would suggest that is not the case:
https://forums.moneysavingexpert.com/discussion/6336374/mileage-allowance

There was also a similar question from another poster in the past couple of days:
https://forums.moneysavingexpert.com/discussion/6337776/self-employed-car-question

Options to buy a vehicle as a company vehicle vary depending upon exactly how your employment status is structured and, even then, can be a more complex / involved question as factors such as BIK have to be considered.

Why does your current car have to be replaced right now?
Are you securing good levels of work?
Could you "limp along" with a temporary solution and squirrel away absolutely every spare penny for a few weeks to get you to a point where you can buy a vehicle outright?  I know the used car market is crazy right now but there are many options available at less than £8k.

It is also likely that any purchase through your company (assuming that would also mean you need finance) will be no easier to obtain than personal credit as lenders are likely to require personal guarantees.

mrkjd

Contractor  inside IR35, director Ltd. Inside CIS.

Grumpy_chap

Given that you have a complex series of contracts, working in different structures for different parts of your work, do you engage the services of an Accountant?  They should be able to advise on the most appropriate way to finance a new vehicle.  It may be that this situation cannot be fairly detailed out in a public internet forum and partial information risks incorrect suggestions which may be costly.

Does your Ltd Co. have the funds (retained profits) to finance the vehicle?  If so, there are still different ways that those funds might be put to this use and not all solutions require the Ltd Co to own the vehicle.  If the Ltd Co. does not have the retained funds, then it may be difficult for the Ltd Co. to borrow the necessary finances.

BIK on an £8k estate car is calculated on the original list price when new, so might be prohibitive.  There was formerly a reduction in BIK for older cars but I understand that has been ceased.

I wonder whether this is a question for this forum, or becomes more of a tax question?