Another Company Car Question- difficult times

[johnsmith]

Hi guys,

I'm the director of a one man Ltd Company and use my private car for all the biz trips. In the past 2 years, i have done approximately 12k miles out of which 10k is solely for Biz purposes only. the other trips has had dual purposes e.g. going to the bank( for the biz) but picking up groceries on the way back. so these trips( which amount to nearly 2 k), i haven't put as biz trips.Now I have been doing the 40p/mile version for the past 2 years.

My car which is nearly 10 years old needs frequent servicing and the mileage is not the best, esp during these hard times.

I would like to get a new car and wondering the best options -
1. get a second hand car - privately and continue to do the same as above
2. get a New car - approx value 20k, with petrol/hybrid, CO2 89gm ( yes u guessed it right- it's the new Toyota Pruis with a good 72mpg)- as a Company car.

Please advice what my best option would be - I did ask my accountant last year and he was not very keen on this, so pls be kind and give ur opinions

Please Note: We also have a family car which my wife uses,which is more fuel efficient and spacious than my own car and we use this most of the times, as the child seats and prams are in it all the time.Also use this car for any long family trips and the weekly supermarket shoppings.

thanks for reading and any suggestions really appreciated.

 

[EmployEasily HR Services]

I'm sure your accountant knows what's best.

IMO, don't go for the 'company car' option as this isn't tax efficient.

 

[johnsmith]

thanks EmployEasily HR Services,

it's just that, n the past I have got suggestions from this forum which has been very useful and was able to take it to my accountant to action a few plans which we, (def. me) would have never incorporated if I never took them to him. hope u understand

 

[Maslins]

Just ignoring the tax for one second...you're debating spending:

1. somewhere from £1k to presumably not much more than £10k
2. £20k.

So tax should only be a minor reason (ie don't spend £20k instead of £5k to save £2k tax!)

Option 1 is simplest, and will almost certainly (unless it's a 2nd hand Ferrari) work out cheapest overall.

If you were to go along the option 2 lines, I'd be more inclined to go for something like a small Peugeot Blue Lion car, which would have similar CO2 emissions, but cost a lot less. You say your car's nearly 10 years old, how near? With the scrappage scheme you could get £2k off the cost of the new car.

 

[MyAccountantOnline]

Please advice what my best option would be - I did ask my accountant last year and he was not very keen on this, so pls be kind and give ur opinions

Hi John - for an accountant your question is a very typical one and one which requires a few minutes sat down with the calculator.

To be honest you are paying fees for an accountant and shouldnt have to ask for advice on a forum like this.

If your accountant didnt, or couldnt answer you properly I'd go back to him/her and ask them to clarify and explain the position to you.

If you arent happy with the explanation you need to question whether you have the right accountant.

 

[taxattack]

Hi guys,

I'm the director of a one man Ltd Company and use my private car for all the biz trips. In the past 2 years, i have done approximately 12k miles out of which 10k is solely for Biz purposes only. the other trips has had dual purposes e.g. going to the bank( for the biz) but picking up groceries on the way back. so these trips( which amount to nearly 2 k), i haven't put as biz trips.Now I have been doing the 40p/mile version for the past 2 years.

My car which is nearly 10 years old needs frequent servicing and the mileage is not the best, esp during these hard times.

I would like to get a new car and wondering the best options -
1. get a second hand car - privately and continue to do the same as above
2. get a New car - approx value 20k, with petrol/hybrid, CO2 89gm ( yes u guessed it right- it's the new Toyota Pruis with a good 72mpg)- as a Company car.

Please advice what my best option would be - I did ask my accountant last year and he was not very keen on this, so pls be kind and give ur opinions

Please Note: We also have a family car which my wife uses,which is more fuel efficient and spacious than my own car and we use this most of the times, as the child seats and prams are in it all the time.Also use this car for any long family trips and the weekly supermarket shoppings.

thanks for reading and any suggestions really appreciated.

For the car you mention, if bought (or leased) new by the company, a 100% first year allowance is available which will reduce company profits. If this creates a loss for the company, this can be carried back. The usual one year carry back is currently extended to three years.

There will be a benefit in kind on yourself as employee, calculated as 10% of the list (not purchase) price of the vehicle. This benefit will be taxed at 20%, and the company will pay Class 1A NICs at 12.8%, ie, based on a list price of £20k, a cost of £656, less Corporation Tax on the NICs.

If the company is Vat registered and the vehicle is leased, 50% of the Vat on the lease payments can be recovered, as well as Vat on running costs (including the business element of fuel).

So there may be a good case for the company car.

Chris

 

[David Griffiths]

if bought (or leased) new by the company, a 100% first year allowance is available

What is your authority for claiming a 100% first year allowance on a leased vehicle? :|

 

2. get a New car - approx value 20k, with petrol/hybrid, CO2 89gm ( yes u guessed it right- it's the new Toyota Pruis with a good 72mpg)- as a Company car.

Toyota Prius true fuel consumption is no where near those figures,not exactly a green car and a poor driving experience.

http://www.honestjohn.co.uk/road_tests/index.htm?id=135

If you want a green car with truely good consumption,Fiesta or polo blur motion diesels.

Earl

 

[taxattack]

What is your authority for claiming a 100% first year allowance on a leased vehicle? :|

David, thanks for raising this - my post was badly expressed. (I would like to edit it, but the option does not seem to be available).

Without delving into finance and operating leases, my edit would replace the words "(or leased)" with "(outright or by hire purchase)".

Chris