Electric car through Ltd? Electric car through Ltd? - Page 7
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  1. #61

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    Just so I'm clear (and can go back to my accountant armed with solid info)... on a *lease*... the components on it are...

    -- monthly payments (ex VAT) are allowable expenses
    -- Can claim 50% of VAT on each monthly payment
    -- the initial rental payment is also an allowable expense (albeit in a lump sum)

    Correct?

    Given I have cash in the bank, would it also make more sense to have a high initial rental amount in order to get it thru the books in the current year, with smaller payments in the future?

    Thanks!

  2. #62

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    Quote Originally Posted by gypsymoth View Post
    Just so I'm clear (and can go back to my accountant armed with solid info)... on a *lease*... the components on it are...

    -- monthly payments (ex VAT) are allowable expenses
    -- Can claim 50% of VAT on each monthly payment
    -- the initial rental payment is also an allowable expense (albeit in a lump sum)

    Correct?

    Given I have cash in the bank, would it also make more sense to have a high initial rental amount in order to get it thru the books in the current year, with smaller payments in the future?

    Thanks!
    Good question. I would like to know too

    Did you manage to find out, make a choice?

  3. #63

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    Morning all - first time poster:

    So next March I’m thinking of going down the electric route with the release of the new Tesla 3. However, I’m trying to work out how much the car will cost me, and what is the best way to purchase it.

    A bit of background: I pay 32.5% tax on dividends. I tend to keep around a years worth of salary in the company in case of a lack of work. Therefore, I am thinking of purchasing through HP.

    To the Maths:

    The car cost £53240. You are allowed a 100% allowance on the corporation tax in the first year, so I will save £10115.

    This will be put down as the deposit on the car, so the car cost will reduce to £43125.

    The remaining £43125 will be funded either through a 5 year HP deal (£828 per month, and £49680 cost for the business). There is no road tax payable (I believe), I would have to pay 2% BIK per year which is a negligible cost (£424). Insurance, servicing etc can be paid through the company.

    If I were to sell the car I would have to pay Corp tax on the sale of the car, so I would guess around £5k if I sold after 5 years. I would also save around £9000 over the 5 years in fuel costs personally.

    So, a couple of questions to those that know this better than me.

    1. I am trying to work out the real cost to myself versus what I would pay to buy/lease a car personally. Would this be £828 x 0.81 (minus corp tax) x 0.675 (minus dividend tax) = £453 p/m, or would it be £828 x 0.675 (minus dividend tax) = £559 p/m
    2. Once the 5 years are complete and the car is purchased, can I just keep the car as a depreciating asset within the business, and keep using it (or give it to the missus) ad infinitum and just pay BIK?
    3. Does the overall maths above make sense?

    If so, it seems to me like it is a bit of a no-brainer…as long as I keep my company going.

    Thoughts?

  4. #64

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    Quote Originally Posted by sim2kuk View Post
    Morning all - first time poster:

    So next March I’m thinking of going down the electric route with the release of the new Tesla 3. However, I’m trying to work out how much the car will cost me, and what is the best way to purchase it.

    A bit of background: I pay 32.5% tax on dividends. I tend to keep around a years worth of salary in the company in case of a lack of work. Therefore, I am thinking of purchasing through HP.

    To the Maths:

    The car cost £53240. You are allowed a 100% allowance on the corporation tax in the first year, so I will save £10115.

    This will be put down as the deposit on the car, so the car cost will reduce to £43125.

    The remaining £43125 will be funded either through a 5 year HP deal (£828 per month, and £49680 cost for the business). There is no road tax payable (I believe), I would have to pay 2% BIK per year which is a negligible cost (£424). Insurance, servicing etc can be paid through the company.

    If I were to sell the car I would have to pay Corp tax on the sale of the car, so I would guess around £5k if I sold after 5 years. I would also save around £9000 over the 5 years in fuel costs personally.

    So, a couple of questions to those that know this better than me.

    1. I am trying to work out the real cost to myself versus what I would pay to buy/lease a car personally. Would this be £828 x 0.81 (minus corp tax) x 0.675 (minus dividend tax) = £453 p/m, or would it be £828 x 0.675 (minus dividend tax) = £559 p/m
    2. Once the 5 years are complete and the car is purchased, can I just keep the car as a depreciating asset within the business, and keep using it (or give it to the missus) ad infinitum and just pay BIK?
    3. Does the overall maths above make sense?

    If so, it seems to me like it is a bit of a no-brainer…as long as I keep my company going.

    Thoughts?
    Save a lot of cash and just do a contract lease. Electric cars are in its infancy, battery tech is evolving at lightning pace (pardon the pun) so mitigate your asset from being devalued by simply purely leasing the car. I’ve done the same with the new iPace

  5. #65

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    Quote Originally Posted by 94bb View Post
    Save a lot of cash and just do a contract lease. Electric cars are in its infancy, battery tech is evolving at lightning pace (pardon the pun) so mitigate your asset from being devalued by simply purely leasing the car. I’ve done the same with the new iPace
    I understand that, but isn't it more expensive to do that, with no asset at the end of it? 3 year, 15k mile lease is coming in at £894 p/m, with a £5.5k deposit. At least with owning the car you will get a decent sum back at the end of it.

  6. #66

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    Quote Originally Posted by 94bb View Post
    Save a lot of cash and just do a contract lease. Electric cars are in its infancy, battery tech is evolving at lightning pace (pardon the pun) so mitigate your asset from being devalued by simply purely leasing the car. I’ve done the same with the new iPace
    Great advice, plus I think leasing you can claim 50% of the VAT back even if the vehicle is used for non-business mileage, whereas that's not the case if you bought it outright.

    Anyhow, and apologies for hijacking this thread but I'm also looking at the iPace but in 2019/20 tax year it attracts something like £ 13k of BIK, which means that would be £ 13k less dividends I'd be able to take However, next year the BIK on electric cars falls down to 2% so I'm definitely having an iPace (or similar) at that point. It would have to have those big space-age looking wheels though :-D

  7. #67

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    How will you find it via your company if you are inside IR35 come next April ?


    Sent from my iPhone using Contractor UK Forum

  8. #68

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    Quote Originally Posted by GhostofTarbera View Post
    How will you find it via your company if you are inside IR35 come next April ?


    Sent from my iPhone using Contractor UK Forum
    Agreed, I don't know how this would work then. However, I guess I would have the choice of not taking an inside IR35 job - I will be quitting where ever I am at the end of March, so there is no carry over if I am inside IR35. I'll take some time off, survey the market, and then go from there.

  9. #69

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    Quote Originally Posted by 94bb View Post
    Save a lot of cash and just do a contract lease. Electric cars are in its infancy, battery tech is evolving at lightning pace (pardon the pun) so mitigate your asset from being devalued by simply purely leasing the car. I’ve done the same with the new iPace
    Whats the ipace like ? Looks interesting and maybe worth a look ..........

  10. #70

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    Quote Originally Posted by saptastic View Post
    Whats the ipace like ? Looks interesting and maybe worth a look ..........
    It's like this.

    'CUK forum personality of 2011 - Winner - Yes really!!!!

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