limited company vehicles with joint directors

[andyb1983]

Hi all after some advice please

I am a joint director of a limited company 50/50 split. At present we both own our own vehicles (cars) and claim the mileage back for business use.

I feel I no longer need my vehicle for anything other than for business use so am thinking of selling it and having a van purchased through the business.

My co- director feels he still requires his vehicle for personal use as well but doesn’t want a company car and would rather own his own vehicle as is now, but he is looking to change his vehicle.

He feels we should both take dividends from the company to help purchase the vehicles i.e I buy a van personally and he buys a car personally and both claim mileage as we do now.

My feelings are that buying a van through the business if far more tax efficient and also to a point why should I be use my personal money to buy a vehicle that only the company will benefit from and also pay the vat on it and also be taxed on the dividends used to buy it.

His feelings are that I will be getting a benefit from the company that he is not if the business buys the van.?

Hope that makes sense! And you can maybe give some advice and guidance if you don’t mind?

 

[Mark T Jones]

Apart from exploring the tax angles, it's down to sensible discussion between the two of you

 

[WaveJumper]

I think the most sensible way forward is to ask your accountants what they think the most advantageous way of purchasing new vehicles would be.

 

[UK Contractor Accountant]

His feelings are that I will be getting a benefit from the company that he is not if the business buys the van.?

for which you will be taxed on as you will be using the van for personal use having sold your personal car.

The van benefit charge for 25/26 tax year will be £4020 (assuming you don't go for fully electric van) which for a 40% taxpayer will cost £1.6K approx in tax each year.

 

[Newchodge]

I feel I no longer need my vehicle for anything other than for business use so am thinking of selling it and having a van purchased through the business.

Where will the van be kept overnight? How will you get to the workplace every day?

 

[andyb1983]

for which you will be taxed on as you will be using the van for personal use having sold your personal car.

The van benefit charge for 25/26 tax year will be £4020 (assuming you don't go for fully electric van) which for a 40% taxpayer will cost £1.6K approx in tax each year.

Hi. I will not be using the van for any personal use as we have another car in the household. Hence the reason for thinking of selling my personal car as at present it is only used for business use.

Where will the van be kept overnight? How will you get to the workplace every day?

Where will the van be kept overnight? How will you get to the workplace every day?

It will be kept at my home and used to travel to the workplace sites but would not be used for any other purpose. Would this be covered under a restricted private use condition?

 

[Newchodge]

Hi. I will not be using the van for any personal use as we have another car in the household. Hence the reason for thinking of selling my personal car as at present it is only used for business use.


It will be kept at my home and used to travel to the workplace sites but would not be used for any other purpose. Would this be covered under a restricted private use condition?

I think commuting to a normal workplace would make it personal use for HMRC. If your workplace is your home address and you travel to different workplaces every day, you would be OK. Have a look here https://www.gov.uk/expenses-and-benefits-company-vans/whats-exempt

 

[UK Contractor Accountant]

I've seen HMRC inspectors agree a settlement agreement with companies to pay for van benefits for their workers as they were allowed to take the vans home.

So in your case as the van is "available" for private use, being kept at your home, you would need to show any private use was incidental on any HMRC inspection. Mileage logs of business journeys and only insured for commercial purposes would be good indicators to demonstrate business use only.