Company car value at disposal.

[crus]

Hi all,

could do with a little help here.

I am about to buy my company car off the my company.

I subsidised the original purchase and it has since been depreciated by 15% reducing balance.

My question is how do I work out a final value for the amount the company would need to be paid for the vehicle.

Would it just be a case of

50% of the ex VAT vehicle price was 10K

therefoe in the first year it lost 1.5K and in the following 6 month (selling mid way through the year) 7.5% of 8.5K, loosing another 637.50 given an asset value of £7862.50 to pay with VAT on top.

thanks

D

[dcaccounting]

What is the vehicle actually worth on todays open market? Regardless of your accounts and the treatment it's had.

Regards

Dean

[crus]

Not sure,

lets say 10K to make the maths demonstratbly easy.

D

[Jayne]

Nip down to your local garage and ask them to look up the book price for the car. Could be worth even less than you think, hence even cheaper to buy!

Jayne :D

[crus]

I have good source of price info glasses etc etc.

Just need to work out the fairest way to get it out, as I am having to look after my shareholders intrestes and take some backlogged wages at the end of year and then pump this money back in by buying the car off the company at fair price not higher or lower thus keepin gthe cash as working capital as I don't need the extra wages at moment.

It gets confusing as I subsidised the car at point of purchase.

Am I better off then getting market value, wacking an amount off the value of the car equal in % to the % I put in at point of purchase thus accounting for my share of the assett and then putting the loss between my first year depreciation and the remaining end sale price in as the depreciation for this year?


D

[dcaccounting]

If you have funded the initial purchase of the vechile privately then you will have a "directors account" that will be in credit by that amount. These funds will eventually be released to you as and when required if you haven't already and them via "directors renummeration" or "dividends" (have a chat with your accountant if needs be)

Depreciation is basically a guestimate firgure and year end to say what a vechile or asset is worth.... no-one knows what it is actually worth until point of sale.

The best way to deal with your situation and as you said "fairest way" is to purchase the vehicle at market price... £10,000

Regards

Dean

[dcaccounting]

Also if the company initally recliamed any VAT then it would be sold to you for £10,000 + VAT

Regards

Dean

[Alpha]

Also if the company initally recliamed any VAT then it would be sold to you for £10,000 + VA

Dean you really must stop keeping these late nights :D :D

If it is a car that has been purchased for an individual to use then the company cannot reclaim the vat.

:wink:

[dcaccounting]

True Alan, but you are speaking "technically"

I would always say that to a client and specially someone I didn't know.... In my experience its amazing how many "clients" see vat on the purchase of a "car" and reclaim it on the next return, without seeking professional advice. :)

Prehaps I should of added abit more detail to my post :)

Good of you to keep me on my toes though :lol:

Regards

Dean

[crus]

OK,

think I get what you guys are saying,
so just whack in the depreciation figure down to todays market value?

D

[Joyous]

OK,

think I get what you guys are saying,
so just whack in the depreciation figure down to todays market value?

D
Errm, no. :shock:

The car’s currently sitting on your balance sheet at net book value (NBV), i.e. what you paid for it less depreciation to date. When you sell it to yourself at whatever it’s market value is you record a profit or loss on sale. A profit if you sell it for more than the NBV or a loss if sold for less. You do not adjust the depreciation to suit.

Just to confuse things further there’s also the tax treatment. You should have been claiming capital allowances on the car so it also has a tax written down value (TWDV). When you sell it the company will either claim balancing allowances or suffer a balancing charge.

When you calculate the company’s taxable profits at year end you strip out the profit/loss on sale and replace it with the balancing allowance or charge.

Crus – you being the apparent wheeler/dealer that you are, do you not have an accountant that you can discuss this with?

Regards

Joy

[crus]

Hi,

there are reasons why I have asked the question, primarily my last accountant was useless, and I now take a much greater role in directing and checking whats being done with our accounts.

thanks for the help.

D