Company car?

[showshine]

Hi all

Been reading for ages but thought i would click the register button

I have been a sole trader for some time but we are now into week 5 of our LTD company.

To cut a really long story short. I am the owner of the company and my partner is working for the company which is a detailing/valeting company.

We have turned over about £6500 in 4 weeks and our overheads are tiny (Fuel, products etc etc)

Now obviously we are new but have 2 good contracts and more in the pipeline and look to achieve 75000 turnover in year 1 (Approx)

I have a good personal credit rating and we are looking at buying a new car as my old one is costing a fortune.

I am also getting a new mortgage in the very near future so cant really justify the monthly payments as this will reduce my mortgage size so we were wondering if there was any way i could lease a car through the company even though we are a new set up.

Or, if this isnt possible. Could the business pay me a salary as a director so this then boosts my monthly income enabling me to get a car and the mortgage (If this makes sense)

 

[liams7]

You will find it hard to find anyone to lend a company money which is only a month old. You are doing really well so far but they wont see that.

You may want to speak to ling at lingscars though as she would be best to talk to about it.

You might be better paying yourself a higher salary.

 

[showshine]

Hmm i thought so.

It would be fine if we were not going for a new mortgage because we can get just what we need on current outgoings so a car would push us over that.

But if i paid myself a bigger salary then the incomings would sort that i think :|

 

[MyAccountantOnline]

Your company could indeed lease a vehicle if you can find someone who will lease to a new company, but do discuss this with your accountant first.

Having a vehicle which is availiable for private use as a director of a limited company may lead to an unexpected tax charge (benefit in kind) and as such you may decide its not the best option.

Nicola

 

[showshine]

Thanks for that.

This car would be used just for business

 

[elaine@cheapaccounting]

See this guide on company car tax:

http://www.comcar.co.uk/

A free guide here:

http://www.comcar.co.uk/newcar/companycar/comcar/companycartax.cfm

And use the various calculators on the home page to work out the cost to you on your tax as well as the employers NI.

 

[MyAccountantOnline]

Thanks for that.

This car would be used just for business

For tax purposes the key is whether its availiable for private use. You might find it helpful to have a look at this -

http://www.hmrc.gov.uk/paye/exb/a-z/c/cars.htm

Its extremly difficult to have a car which never has any private use for tax purposes.

 

[Zeno]

Have you approached any mortgage lenders regarding your situation yet? It is not as simple as sticking through a salary to suit your requirements.

As the company has been trading for such a short period you are likely going to experience issues with whatever spotty kids are processing this.

 

[newcarcontracts]

The fact that you have been trading for some time as a sole trader prior to becoming a limited company will make it significantly easier for a finance company to underwrite this lease for you - it's likely that they will want to see accounts for the sole trader company prior to an acceptance. We help out with a lot of new start companies and while it's not as clear cut as underwriting an established, limited company it can be done without too much trouble.

Happy to quote if there's anything you're after!

Cheers, Richard.

 

[showshine]

You have PM Richard

 

[showshine]

Richard

Just for your info, i have also submitted my details to you via your website

Hopefully we can sort something out - Want an S5/A5 cab

Thanks

 

[WelshAsh]

It's quite possible that a leasing company will accept your ltd company as a customer with a directors (You) personal guarantee.

Regards,

Ash

 

[showshine]

Oh ok,

I didn't think this was possible. I'll email a few of the companies to see if this is good to go

Thanks for the reply

 

[Paul Norman]

Be VERY careful about having a car owned by the company. You will need to prove VERY conclusively that the car is not even available for private use.

In which case, you will need another car, for private use, I suspect.

Personally, as an experienced business person, I would counsel against being in such a hurry to acquire a new car. It is the classic new business error. Build up a few month months trading first.

You will receive a great deal of advice from many people on this, but seriously. Do you NEED a new/nearly new car at this stage? And will you really never use it privately, not even occassionally?

Because the moment you do, you are up for a very large tax bill.

 

[showshine]

We are in a financially strong position as a couple anyway and need a new car - There must be ways of using it privately also - Salesmen etc etc use company cars privately

 

[PhilWarman]

But they pay Company Car tax...

 

[showshine]

Which is fine by me

 

[PhilWarman]

Have you looked what the Co Car tax is on an A5 Cab or an S5? I think there is a calculator on the HMRC website..

 

[showshine]

Yes ive done it - £1200 per year

 

[PhilWarman]

Thats based on 20% tax band I guess...what if the company does very well and you take a higher salary....its all relative..

 

[showshine]

The way we work is that i take a salary to pay bills and have a normal lifestyle - The Mrs earns well and she is in partnership with her sisters online business.

I will be in the 20% band for a while yet

 

[PhilWarman]

Cool - I guess you need to find someone to lease it to you now then! I must admit to liking the A5

 

[showshine]

Thanks mate

Yeah, im kinda hoping someone will sort it for me

Thanks for your help and advice

 

[PhilWarman]

I think someone mentioned Lings Cars earlier on in the thread?

 

[showshine]

Yeah they wouldn't do anything until the 2 yrs trading limit was achieved

 

[PhilWarman]

Flexxilease?

 

[newcarcontracts]

Yeah they wouldn't do anything until the 2 yrs trading limit was achieved

That's probably via Lex - we use them too and they're right - Lex won't consider companies under 12 months old. We could still consider a hire purchase / lease purchase in your own names, or in the company with your director's guarantee, if this is an option you want to explore further.

Cheers,

Richard

 

[showshine]

That's probably via Lex - we use them too and they're right - Lex won't consider companies under 12 months old. We could still consider a hire purchase / lease purchase in your own names, or in the company with your director's guarantee, if this is an option you want to explore further.

Cheers,

Richard

Ok ill drop you an email with our details for the business via directors guarantee

 

[Zeno]

Not looking to tell you how to run your business but are you sure that leasing a car is an appropriate investment at this stage in your company's growth?

Why commit to this cost (and a director's guarantee at that)?

You realise what you will pay as the benefit in kind on a company car?

 

[showshine]

We are fully aware of the cost.

I have a ministry of defence contract and 3 commercial contracts and my wife is in business and is a sergeant in the police so our wages/income/profit from the other business make it more than easy to do.

We want a nice new car, we are getting one

 

[Zeno]

We are fully aware of the cost.

Including the BIK and Class 1A NI charge?

May I ask why a car? Have you considered a commercial vehicle instead? (would have thought this would be a more appropriate use of the company resources...)

 

[showshine]

We have 2 vans which are paid for.

Seriously, cost is not a problem to us (Not being arrogant but it isn't)

 

[elaine@cheapaccounting]

We have 2 vans which are paid for.

Seriously, cost is not a problem to us (Not being arrogant but it isn't)

well then - you could pay the suitable advice which would address your specific question

 

[Zeno]

Seriously, cost is not a problem to us (Not being arrogant but it isn't)

A fool and his money are soon parted...

That sounds harsh and I am not trying to insult you but why open yourself to all this unnecessary tax burden and saddle your fledgling company (and yourself) with this sort of debt?

I am afraid I cannot understand your reasons for requiring the car to be through the company in the first place.

At the very least, have you considered the low emmision cars (of course not, wouldn't be seen dead driving one)? These at least have somewhat favourable tax advantages.

 

[showshine]

I really don't care what you have to say - insults are petty and childish my friend so please go read another thread

 

[elaine@cheapaccounting]

I really don't care what you have to say - insults are petty and childish my friend so please go read another thread

its an open forum mate

 

[Zeno]

I really don't care what you have to say - insults are petty and childish my friend so please go read another thread

It's only an expression. I did say I did not mean offence.

I am simply trying to say that there are few instances where company cars make business sense. Any other the other accountants will say much the same thing.

 

[FreelanceSoftwareDeveloper]

I can't understand why the OP is so set on doing this through the company with a personal guarantee.

My previous employer stopped company cars and instead paid an allowance (more salary) to cover the cost of employees (who required a company car) to buy/maintain their own car and then you can also claim back 40p/mile from the company to cover the fuel and running costs (tax, insurance etc).

I believe this is likely to be the most cost effective option, all the 40p/mile expenses are then tax deductable I believe.

I'm not claiming to know the details of this as I didn't have a company car but thats certainly the impression I got is that a private car and claiming expenses is the most cost effective option.

The only reason I can see for not doing it personally is if you think it will affect your ability to get a mortgage. I know when I got my mortgage I had 3 months left on a personal loan and although I could afford both I was asked to pay off the loan in advance to improve my mortgage application.