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First company car
Jaco70
Posts: 203 Forumite
Have owned a small business for many years, but never had a company car. I drive a small company-owned van, and we have a personally owned car for my wife.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.
The reason for considering this is to avoid having to fund the purchase out of personal money, but unsure how much myself and/or the company will have to pay in additional tax.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.
I’m also happy to pay personally for fuel, RFL, insurance, maintenance etc, if that cuts the bill to HMRC.
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Comments
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your questions have factual answers you can look up and have calculated for you
Benefit-in-kind (BIK) company car tax bands 2022 - 2028
Fleet and company car tax explained and BIK rates from 2024 to 2028 | What Car?
VED V1491 -
Jaco70 said:Have owned a small business for many years, but never had a company car. I drive a small company-owned van, and we have a personally owned car for my wife.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.The reason for considering this is to avoid having to fund the purchase out of personal money, but unsure how much myself and/or the company will have to pay in additional tax.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.I’m also happy to pay personally for fuel, RFL, insurance, maintenance etc, if that cuts the bill to HMRC.this year next year following £6,074 £7,288 £8,503
Obviously no car has no optional extras so you-ll be adding 5% - 7% of the original list price of those on top of the above.
No point paying for RFL, insurance and maintanence yourself, they wouldn't increase you personal taxes and would reduce the profits/corporation tax as its maintaining a company asset.
Fuel would be a separate calculation.
Depending on how you finance the purchase will dictate treatment of the purchase of the vehicle itself1 -
DullGreyGuy said:Jaco70 said:Have owned a small business for many years, but never had a company car. I drive a small company-owned van, and we have a personally owned car for my wife.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.The reason for considering this is to avoid having to fund the purchase out of personal money, but unsure how much myself and/or the company will have to pay in additional tax.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.I’m also happy to pay personally for fuel, RFL, insurance, maintenance etc, if that cuts the bill to HMRC.this year next year following £6,074 £7,288 £8,503
Obviously no car has no optional extras so you-ll be adding 5% - 7% of the original list price of those on top of the above.
No point paying for RFL, insurance and maintanence yourself, they wouldn't increase you personal taxes and would reduce the profits/corporation tax as its maintaining a company asset.
Fuel would be a separate calculation.
Depending on how you finance the purchase will dictate treatment of the purchase of the vehicle itselfThanks for that, that’s really detailed and simple to understand.
So, basically, taking year three onwards, tax would be 40% on £8503, so in the region of £3500 extra personal tax per year? Which doesn’t sound too bad to be honest.
Would there be any additional tax for the business to pay? And would I be right in thinking that purchasing a car wouldn’t be offset against corporation tax?0 -
Jaco70 said:DullGreyGuy said:Jaco70 said:Have owned a small business for many years, but never had a company car. I drive a small company-owned van, and we have a personally owned car for my wife.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.The reason for considering this is to avoid having to fund the purchase out of personal money, but unsure how much myself and/or the company will have to pay in additional tax.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.I’m also happy to pay personally for fuel, RFL, insurance, maintenance etc, if that cuts the bill to HMRC.this year next year following £6,074 £7,288 £8,503
Obviously no car has no optional extras so you-ll be adding 5% - 7% of the original list price of those on top of the above.
No point paying for RFL, insurance and maintanence yourself, they wouldn't increase you personal taxes and would reduce the profits/corporation tax as its maintaining a company asset.
Fuel would be a separate calculation.
Depending on how you finance the purchase will dictate treatment of the purchase of the vehicle itselfThanks for that, that’s really detailed and simple to understand.
So, basically, taking year three onwards, tax would be 40% on £8503, so in the region of £3500 extra personal tax per year? Which doesn’t sound too bad to be honest.
Would there be any additional tax for the business to pay? And would I be right in thinking that purchasing a car wouldn’t be offset against corporation tax?
The company will also pay Class 1A NIC on the BIK.
You are in the realms of capital allowances in respect of CT deductions. Don't you have an accountant to advise you on this?0 -
TheSpectator said:Jaco70 said:DullGreyGuy said:Jaco70 said:Have owned a small business for many years, but never had a company car. I drive a small company-owned van, and we have a personally owned car for my wife.
Am considering buying a used car on the company, but struggling to find out the likely cost implications.The reason for considering this is to avoid having to fund the purchase out of personal money, but unsure how much myself and/or the company will have to pay in additional tax.
I am considering a plug in hybrid Range Rover, year 2020, cost around £40 - £45k, although I realise that HMRC will likely calculate tax based on the much higher new list price.
I would never have given any thought to buying a ‘gas guzzler’ on the company, but I’ve heard that the BIK on hybrids is way lower, although I don’t really know any thing more concrete than that.I’m also happy to pay personally for fuel, RFL, insurance, maintenance etc, if that cuts the bill to HMRC.this year next year following £6,074 £7,288 £8,503
Obviously no car has no optional extras so you-ll be adding 5% - 7% of the original list price of those on top of the above.
No point paying for RFL, insurance and maintanence yourself, they wouldn't increase you personal taxes and would reduce the profits/corporation tax as its maintaining a company asset.
Fuel would be a separate calculation.
Depending on how you finance the purchase will dictate treatment of the purchase of the vehicle itselfThanks for that, that’s really detailed and simple to understand.
So, basically, taking year three onwards, tax would be 40% on £8503, so in the region of £3500 extra personal tax per year? Which doesn’t sound too bad to be honest.
Would there be any additional tax for the business to pay? And would I be right in thinking that purchasing a car wouldn’t be offset against corporation tax?
The company will also pay Class 1A NIC on the BIK.
You are in the realms of capital allowances in respect of CT deductions. Don't you have an accountant to advise you on this?
The answers have been really helpful and I’ve now realised that newer models have much lower BIK, due to having a better electric range. I wasn’t aware how it was calculated, and googling it didn’t really give me the answer I needed (I’m aware Google has all the answers, I just wasn’t sure what question to ask).
I’m definitely not in the position to spend 100k on a car, so I think I have my answer.
Thanks again for the advice 👍0 -
I'd look at if there are other options, eg leasing, to get prices and then speak to your accountant. If you were to lease rather than buy then you can recover 50% of the vat and the net payments are OpEx. If you want to make it a CapEx and just buy it outright you probably already have the numbers so the accountant can say which is best for you. How you fund it won't change the income tax and NI1
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Instead of a £45k used money put gas guzzler, if the OP chooses an EV, the BIK will be lower and better capital allowances claim on a brand new vehicle0
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Grumpy_chap said:Instead of a £45k used money put gas guzzler, if the OP chooses an EV, the BIK will be lower and better capital allowances claim on a brand new vehicle
However, I just fancied a Range Rover, rather than actually needing one, and I’m not quite ready to take the leap to pure electric when we only have one car in the household.0 -
Can you take the money as a dividend and buy the car as a personal vehicle, so no BIK ?
Tax on dividend is only once rather than yearly.
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Jaco70 said:
However, I just fancied a Range Rover,
It's not right, and no I'm not one of the perpetrators, but having what's perceived as an oversized car in an overcrowded city comes with risks.
Of course if you're out in the country and / or with secure parking, the risks diminish.Signature removed for peace of mind1
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