Can you tell me the tax implications for buying a company vehicle to be registered in the company name CO2 emissions 138 cost of vehicle aprox £30,000
is this tax effective or is it best to buy personally even if to be used by the company. We are a MOT garage and already have two small vehicles registered to the company?
just quickly the employee will have a BIK of 18% x £30,000 = £5400, which if they are a basic rate tax payer will cost them tax of £1,080, (£2,160 if a higher rate payer) assuming it is not diesel.
If fuel is provided there will also be a BIK on this.
The company will also have to pay class 1a of 12.8% x £5400 = £691.20.
they will however get capital allowance of up to £3000.
I they buy it personally they can claim 45per mile for the first 10,000 miles 25p therafter with no BIK arising.
As to if it is more tax efficient, that depends on the person's circumstances.
Nick
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Nick
Nick Craggs FMAAT ACA AAT Distance Learning Manager
If basic rate taxpayer would pay tax of £1200 (at 20%)
If higher rate taxpayer would pay tax of £1400 (at 40%)
Company would have to pay class IA nic of £828 (13.8% of £6k).
So between you and the company if you are a basic rate tax payer would have to pay £2028 (£1200 + £828) or £2228 (£1400 + £828) if higher rate taxpayer.
Taking the worse case scenario you would need to save £2228 tax through the company to make it worthwhile by putting the car through.
Of course you would be able to put through all the running costs of the car (other than diesel which you say you wont) as there would be a benefit on that if you did. So costs you could put through would be MOT, repairs, insurance etc.
I would say you get capital allowance of £6k not £3k as you get 20% WDA if CO2 emission is less than 160.
So assuming CT rate of 20% (small rate) then your running costs would need to be about £5k to be worthwhile putting through the company. As you would need to save at least £2228 which at 20% equates to £11,140. £6k for capital allowances and £5,140 running costs.
You say the cost of the vehicle is £30k. Have assumed that this is list price as benefits are worked out not on how much you pay for the vehicle but the list price.
Hope the above makes sense.
Cheers
MarkS
PS forgot you will get tax relief on the class 1A of £828 so this works out about £160. So think your running costs have to be about £5k to be worthwhile putting car through company.
