Company cars

[tbooth]

rather than paying myself a dividend at the end of the finacial year
i was thinking of purchasing a company car and maybe one for the wife company secretay.
the company would take on the loan payments, i know i would have to pay extra tax, as i see it this would be better than paying corporation tax.
assuming i dont pay corporation tax on profit left in company.

[Kyajae]

rather than paying myself a dividend at the end of the finacial year
i was thinking of purchasing a company car and maybe one for the wife company secretay.
the company would take on the loan payments, i know i would have to pay extra tax, as i see it this would be better than paying corporation tax.
assuming i dont pay corporation tax on profit left in company.

Don't quote me on this but as I understand it, the cost to your comapny for the car is an legitimate expense. However, Gordson "The Man Who Stole your Old Age" Brown will ensure that this purchase is for you a benefit in kind and thus taxable on top of whatever you pay youself. I don't know if company cars also attract NI but if they do your company may also have to pay 11% emplyers NI on the benefit from your bank balance.

Either way, what;s left in your accounts at the end of your accounting period will get whacked for corpration tax. Sounds to me like you don't have an accountant, but if you do he/she is cr@p.

[ratewhore]

get a hybrid. reduced tax liability...

[Crossroads]

rather than paying myself a dividend at the end of the finacial year
i was thinking of purchasing a company car and maybe one for the wife company secretay.
the company would take on the loan payments, i know i would have to pay extra tax, as i see it this would be better than paying corporation tax.
assuming i dont pay corporation tax on profit left in company.

You need to speak to your accountant.

Depending upon if you buy or lease the car, it will not be treated as plant for tax purposes, so it isn't necessarily going to reduce your CT liability.

In virtually all circumstances it is not worth having a company car when you own the company, but you need to get your accountant to crunch the numbers (or DIY, but given you are asking here, then you obviously need help - and that is best coming from a professional who knows your circumstances)

I assume your last sentence is a mistake, as obviously you WILL pay CT on profit left in the company!

[IR35 Avoider]

I think the tax you pay on the car as a benefit will be far more than the corporation tax you save even if the car is fully allowable as a business expense.

There's a reason why virtually no-one buys cars via their company any more.

[Bigbird]

I assume your last sentence is a mistake, as obviously you WILL pay CT on profit left in the company!

I read the last sentence as him thinking that the value of his cars will come off his profit so he won't pay CT on that value because the cars are an assets of the company so he sees them as essentially "profit left in"?

Which of course is wrong, the cars are indeed each an asset of the company but that means the purchase price doesn't affect the company profit and loss at all, although the depreciation on them can be taken off as a legitimate overhead.

[TaxesClear Ltd]

In most circumstances company cars should be completely avoided by all small private companies and should be held personally as the tax & NI charges for private use are excessive.

Its better to purchase car privately and charge the company business mileage at 40p/mile for the first 10 000 miles.

Dennis

We specialise in small company tax advice/accountancy

[tbooth]

car loan

[QUOTE=Bigbird]I read the last sentence as him thinking that the value of his cars will come off his profit so he won't pay CT on that value because the cars are an assets of the company so he sees them as essentially "profit left in"?

Yes i did think if i spent money on company car it came of corporation tax. Is this so if i took a company loan out to cover cost of buying the cars,the company would also pay the interest !!!

At the moment it looks like i cannot get anything out of running a small ltd company i might as well take a full time job.

[Kyajae]

[QUOTE=tbooth]

I read the last sentence as him thinking that the value of his cars will come off his profit so he won't pay CT on that value because the cars are an assets of the company so he sees them as essentially "profit left in"?

Yes i did think if i spent money on company car it came of corporation tax. Is this so if i took a company loan out to cover cost of buying the cars,the company would also pay the interest !!!

At the moment it looks like i cannot get anything out of running a small ltd company i might as well take a full time job.

DOON'T be a permie, DO get a good accountant, especially one who has the in-house or subcontracted services of a tax specialist advisor. Most accountants provide tax advice as part of their annual charge for doing your books. Put out a posting asking for recommendations for the area of the UK you live.

[adder]

look at something with 120g/km of emissions or less and you can claim 100% tax relief on the purchase price. The new 207 doesn't look bad and a couple of models fit in this category.
I would NEVER take out a loan to buy a car!
I'd be interested in some true cost figures of buying say a £25k car yourself versus running it through a company lease scheme and reclaiming the vat versus buying the thing for cash through the company!?