Buying an EV personal lease vs business limited company lease

sparrow1234

I own a small company and am an additional rate tax earner.  I am looking to buy an electric vehicle and wondered where I might be more tax efficient.  I use the car 80% for business purposes and 20% personal use usually.  Am I right in thinking that if I get a personal lease, I would potentially make more savings personally as can put 80% of lease payments as expenses?

Ebe_Scrooge

There are pros and cons to both approaches.  I know when I had my own Ltd. Co. some years back, it was better to just have the car as a personal car.  Having said that, there were no such things as EVs back then, so I guess the various tax rules could well be very different now.

It might be worth discussing with your accountant - they'll know the current rules & regs, and perhaps more importantly, your particular circumstances.

DullGreyGuy

sparrow1234 said:

I own a small company and am an additional rate tax earner.  I am looking to buy an electric vehicle and wondered where I might be more tax efficient.  I use the car 80% for business purposes and 20% personal use usually.  Am I right in thinking that if I get a personal lease, I would potentially make more savings personally as can put 80% of lease payments as expenses?

Need to do your own maths.

As a company car you can offset 100% of the net lease and insurance as a business expense and recover 50% of the VAT. The BIK for an EV is currently 2% and so you'd pay 45% of that as the tax you'll pay 0.9% of the value in tax per year


I am not sure you can claim 80% of the lease cost for using your own car, you'd normally claim 45p/mile for the first 10,000 miles and 25p/mile there after. Remember mileage doesn't include driving to a regular place of work (aka commuting)

DrEskimo

Be interesting to see if it does work out considerably cheaper.

I looked into EV leasing through work via salary sacrifice and despite being a HRT I found it to still be incredibly expensive. Problem was the lease options being offered were considerably expensive relative to private leases so ended expensive even after the tax relieve.

Ended up sticking with my used EV, which has cost me hundreds of pounds, not thousands and thousands.

Sounds like this might be different and more worthwhile though?

DullGreyGuy

DrEskimo said:

Problem was the lease options being offered were considerably expensive relative to private leases so ended expensive even after the tax relieve.

Ended up sticking with my used EV, which has cost me hundreds of pounds, not thousands and thousands.

Sounds like this might be different and more worthwhile though?

As the director of your company you can choose any lease provider and most offer personal and business leases. 

Your company must have offered really terrible priced leases if a 40% discount and only half the VAT was still more expensive than a personal lease.

doningtonphil

Yes, I would suggest you can do your own Salary Sacrifice scheme.  You will know exactly how much your company pay the lease company each month + 50% of the VAT (you can claim all of the VAT of the maintenance element if you have a 'maintained' lease.  You then show a salary deduction of that amount on your payslip.

So versus funding a car using your 'take home pay' you are not paying the 40% tax on that amount, you are only apying approx half of the VAT and you are only being taxed at 2% BIK

Chisser

If your Ltd Co buys a new EV, the amount of personal use does not matter. 

DrEskimo

DullGreyGuy said:

DrEskimo said:

Problem was the lease options being offered were considerably expensive relative to private leases so ended expensive even after the tax relieve.

Ended up sticking with my used EV, which has cost me hundreds of pounds, not thousands and thousands.

Sounds like this might be different and more worthwhile though?

As the director of your company you can choose any lease provider and most offer personal and business leases. 

Your company must have offered really terrible priced leases if a 40% discount and only half the VAT was still more expensive than a personal lease.

I suspect is was cheaper than a personal lease after the tax savings, but that's not typically a low bar to beat...leases on things like a Model Y are incredibly expensive.

For me it was still going to cost me several thousands over my used EV, and certainly wasn't cheap enough to make me reconsider just buying the same car outright with all the flexibility that offers.

Money_Grabber13579

DullGreyGuy said:

DrEskimo said:

Problem was the lease options being offered were considerably expensive relative to private leases so ended expensive even after the tax relieve.

Ended up sticking with my used EV, which has cost me hundreds of pounds, not thousands and thousands.

Sounds like this might be different and more worthwhile though?

As the director of your company you can choose any lease provider and most offer personal and business leases. 

Your company must have offered really terrible priced leases if a 40% discount and only half the VAT was still more expensive than a personal lease.

I’m in exactly the same position, working for a large multinational. The leasing costs are so astronomical that it makes no sense to have a leased company car. For example, an electric mini is coming out at £330 a month after taking account of the 40% tax saving…

DullGreyGuy

DrEskimo said:

DullGreyGuy said:

DrEskimo said:

Problem was the lease options being offered were considerably expensive relative to private leases so ended expensive even after the tax relieve.

Ended up sticking with my used EV, which has cost me hundreds of pounds, not thousands and thousands.

Sounds like this might be different and more worthwhile though?

As the director of your company you can choose any lease provider and most offer personal and business leases. 

Your company must have offered really terrible priced leases if a 40% discount and only half the VAT was still more expensive than a personal lease.

I suspect is was cheaper than a personal lease after the tax savings, but that's not typically a low bar to beat...leases on things like a Model Y are incredibly expensive.

For me it was still going to cost me several thousands over my used EV, and certainly wasn't cheap enough to make me reconsider just buying the same car outright with all the flexibility that offers.

Not sure a fully fair comparison to consider a brand new car via any scheme to retaining your existing vehicle unless that is on a lease itself.  Certainly right to consider if you really need a new car or not but in almost all cases the vehicle with no outstanding finance is going to be cheaper than buying a brand new car on finance (or leasing)... dont need to run the numbers on that one!

Bigphil1474

Where I work, one of the big costs of doing a salary sacrifice lease car was that they take away the car user payment that I get each month (on top of mileage rate). That is on the basis that I'm not having to maintain the car even though I would be paying for the lease! Seems daft. Would have cost me an additional £1k a year. On a personal lease I could get the same car for about £50 a month more than the salary sacrifice scheme but kept my £85 a month payment. Left it for now.