nowtta60
Posts: 182
Joined: Sun Aug 03, 2014 10:15 am
Location: Staffordshire, UK

Anyone buying through a company in the UK?

Sun Aug 03, 2014 11:02 am

Hi all,

Been for a test drive today after monhs of pouring over stats, and uming and ahing over costs and options. The test drive has convinced me this is going to be my next purchase. I'm going in tomorrow to put down a deposit and talk to the finance guys.

I work as a freelance IT contractor and have the option to buy the car - or lease through my own 1 man company.

I wondered if anyone else has done this route. Normally my accountant tells me to buy a car private and claim the 45p a mile.

However there are several things which weigh in favour of buying an EV like th i3...

1) If it made it to the finance bill they were going to extend the first year enhanced capital allowance until 2015. If my understand this correctly it means instead of making company profit .. i can buy the car as an asset and the corporation tax part can be written off in 1 year as opposed to the usual 4 years. Effectively on a £30k car that's getting an extra £6,000 that would have gone to HMRC but instead goes towards the car purchase.

2) The low Bik rate means I'll pay about £633 over the next 3 years rather than say £2,000 on a 2.0 diesel

3) I can still claim 14p a mile for fuel when using a company car on company business (despite the fact on E7 it's less than 2p a mile).

4) Purchasing thru the business rather than personally means I can take less in divindends, and avoid getting into the 40% tax rate. This effectively saves me another 20% off the cost.

The downside - is that buying means I become the owner - and have to worry about depreciation. So am trying to find out if the first year write off scheme covers leasing. Info is a bit sketchy. I'm on flat rate VAT and switching to caswh accounting wouldn't be worth it just to claim back half the VAT on the elase payments.
i3 REX Ordered 06/08/14. Collected 27/01/15
Capparis White, 429s, Loft, Park Assist, Winter Pack, Professional Media, Drive Assist Plus, DC Prep, LED headlamps.
Essential energy reading for EV owners... http://www.withouthotair.com/

jadnashuanh
Posts: 5196
Joined: Thu May 22, 2014 2:07 pm
Location: Nashua, NH USA

Re: Anyone buying through a company in the UK?

Sun Aug 03, 2014 12:01 pm

Just an aside to your calculations...the mileage allowance is meant to cover not only the fuel, but depreciation and maintenance (at least how they do it in the USA). Admittedly, there isn't much maintenance on the i3, but you still have to buy tires, and if you keep it long enough, maybe a new battery after the warranty expires. Most people don't keep cars that long, but some do, and with the i3, it's likely it could last way longer than a conventional car.
Jim DeBruycker
2014 i3 BEV, 2021 X5 45e
(The i3 will be sold soon, <17K-miles, interested?)

Plug
Posts: 259
Joined: Fri Aug 02, 2013 1:17 pm
Location: UK

Re: Anyone buying through a company in the UK?

Sun Aug 03, 2014 2:21 pm

nowtta60 wrote:I wondered if anyone else has done this route.
Hi nowtta60, there are lots of people who have done this (me included) as all of the benefits combined are very significant and without them I probably wouldn't have bought an i3.

As for advice, I'll say what I usually do when I see threads like this pop up... don't bother taking such important advice from an internet forum, (there has been incorrect info posted here on this in the past). Speak to your accountant, mine was essential in going through the details as it's a complicated subject although you do seem to have a good understanding already.

nowtta60
Posts: 182
Joined: Sun Aug 03, 2014 10:15 am
Location: Staffordshire, UK

Re: Anyone buying through a company in the UK?

Sun Aug 03, 2014 4:55 pm

Plug wrote:
nowtta60 wrote:I wondered if anyone else has done this route.
Hi nowtta60, there are lots of people who have done this (me included) as all of the benefits combined are very significant and without them I probably wouldn't have bought an i3.

As for advice, I'll say what I usually do when I see threads like this pop up... don't bother taking such important advice from an internet forum, (there has been incorrect info posted here on this in the past). Speak to your accountant, mine was essential in going through the details as it's a complicated subject although you do seem to have a good understanding already.

Thanks - have an email off to them already. Just don't think it will be something they deal with every day and may get it wrong themselves! Hopefully they'll be at least familiar with HMRCs capital writing down procedure though! Something I can't claim to know much about.

For anyone else that comes across this thread laterr.. Been doing a lot of googling all afternoon. Did manage to find on HMRC site it defintely got extended to 2018 but they dropped the ability to claim against lease payments. However I think that means Hire purchase is still covered as well as outright purchase. I meeting with the BMW Business sales guy tomorrow so hopefulyl he'll be able to shed some light on it!

This site als gives a good explanation of what the cpaital write down does.. basically for every £10k you spend you save yourself £2k in Corporation tax paymetns :-)

http://www.myersclark.co.uk/sites/www.m ... %20car.pdf

Hopefully I'll be up for a Telsa Model III in a 2017, but the i3 looks the best thing around for now. Sadly gotta wait till Feb!
i3 REX Ordered 06/08/14. Collected 27/01/15
Capparis White, 429s, Loft, Park Assist, Winter Pack, Professional Media, Drive Assist Plus, DC Prep, LED headlamps.
Essential energy reading for EV owners... http://www.withouthotair.com/

Plug
Posts: 259
Joined: Fri Aug 02, 2013 1:17 pm
Location: UK

Re: Anyone buying through a company in the UK?

Sun Aug 03, 2014 11:09 pm

nowtta60 wrote:I'm meeting with the BMW Business sales guy tomorrow so hopefully he'll be able to shed some light on it!
I wouldn't hold your breath :)

I asked for similar advice when I was buying mine. The salesman admitted he knew very little about it but said he could get financial advice from a BMW department and that he'd ring them and get all of the details for me. Unfortunately, when he got back to me he'd learnt very little. The thing is though, if the salesmen had basic understanding of this subject and could explain the financial benefits to customers who are able to purchase via LTD companies then I'm sure it'd help them sell more cars.

Saying that, my experience was 12 months ago back in August last year so hopefully things have improved since then.

pastyboy
Posts: 56
Joined: Sun Mar 16, 2014 2:36 pm
Location: South west UK

Re: Anyone buying through a company in the UK?

Mon Aug 04, 2014 6:32 am

2) The low Bik rate means I'll pay about £633 over the next 3 years rather than say £2,000 on a 2.0 diesel

3) I can still claim 14p a mile for fuel when using a company car on company business (despite the fact on E7 it's less than 2p a mile).

I am not convinced you can claim 14p per mile. I agree with you that as it has a petrol engine (well, generator) it is a petrol car for mileage purposes, but the HMRC website states that electricity is not a fuel, and so everything is a bit up in the air at present.

The Bik rate goes up next year to 7%, then 9% and then 13%, but is still very attractive.

My dealer, and my accountant, seem to be happy that by buying it through contract purchase qualifies it for the 100% write down in year one and the interest on payments can also be set against tax. Of course, when you sell it you will have to pay back the tax, so if you sell it for £10k you will be liable for £2k corporation tax, but it still makes it worth running as a company car, which is different to most cars.

pastyboy
Posts: 56
Joined: Sun Mar 16, 2014 2:36 pm
Location: South west UK

Re: Anyone buying through a company in the UK?

Mon Aug 04, 2014 6:38 am

I was also directed to this site which may be of use, but for my money it does not answer the question, just raises more!

https://speakev.com/threads/ev-company- ... post-32921

noakey
Posts: 398
Joined: Mon Jan 27, 2014 8:11 am
Location: Swindon UK

Re: Anyone buying through a company in the UK?

Mon Aug 04, 2014 8:47 am

Plug wrote:
nowtta60 wrote:.. don't bother taking such important advice from an internet forum, (there has been incorrect info posted here on this in the past). Speak to your accountant, mine was essential in going through the details as it's a complicated subject although you do seem to have a good understanding already.
Hi...

This is good advise... A quick trip to your accountants can save so much speculation...

I too have an i3 through my company... leased 3 years..

It works for me and the benefits are substantial (in my line of work and circumstances), however go talk to an accountant to understand all of the issues..

Suffice to say.. I too probably wouldn't have bought one otherwise.... (but its awesome)
Neil

BEV at 21,000 miles in first 16 months.
Average 86 miles per charge.
Best on full charge 112miles, worst on full charge 55miles
Loving every mile :)

nowtta60
Posts: 182
Joined: Sun Aug 03, 2014 10:15 am
Location: Staffordshire, UK

Re: Anyone buying through a company in the UK?

Mon Aug 04, 2014 4:03 pm

Bottom line the BMW iguy and the business manager didn't have a clue. I've sent them some links as I pointed out that the typical i8 buyer is more likely to be a wealthy company owner than a middle manager. With the knowledge they can sort of get 20% of the cars value of their corporation tax bill and have less dividends to be taxed at 40% the incentive to buy gets a whole lot stronger. Even for an i3 buyer it's worth them asking the question - do you have your own company - to send them away to talk to an accountant.

To be honest I'd like to make sure there are plenty of i3s around (for spares on my future project Exo-car) so I said you should get BMW corporate to do some illustrative examples i8 Vs "V8" and i3 VS "compact luxury class" diesel car.

My fag packet maths works out I'm getting a £38k car at a nett cost to me personally of £21k after all the tax savings and grant are taken into account. :-) That means as Jim Bowen would say "here's the money you could have had". If I keep it 5 years then..... :-)

Now about fuel rates....
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Whilst it says Hybrids are treated as petrol or diesel for purposes of the calculation. .But then...

http://www.hmrc.gov.uk/manuals/eimanual/EIM23900.htm says you don't get a mileage allowance for electirc - as you say it not a fuel.

I think the best think is to keep a track of how much you use the REX and only stick in a claim for journeys where the distance is over the battery range. I've got a 160 mile drive to my client site, stay there for 2 weeks and come back for the weekend. So I definetely need to be getting something for fuel.

Wasn't happy when I got home and spotted on the invoice "SEAL : Seal and Protect £524!" LOL that will be coming off.
i3 REX Ordered 06/08/14. Collected 27/01/15
Capparis White, 429s, Loft, Park Assist, Winter Pack, Professional Media, Drive Assist Plus, DC Prep, LED headlamps.
Essential energy reading for EV owners... http://www.withouthotair.com/

pastyboy
Posts: 56
Joined: Sun Mar 16, 2014 2:36 pm
Location: South west UK

Re: Anyone buying through a company in the UK?

Tue Aug 05, 2014 3:13 am

[/quote]My fag packet maths works out I'm getting a £38k car at a nett cost to me personally of £21k after all the tax savings and grant are taken into account. :-) That means as Jim Bowen would say "here's the money you could have had". If I keep it 5 years then..... :-)

Now about fuel rates....
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Whilst it says Hybrids are treated as petrol or diesel for purposes of the calculation. .But then...

http://www.hmrc.gov.uk/manuals/eimanual/EIM23900.htm says you don't get a mileage allowance for electirc - as you say it not a fuel.

I think the best think is to keep a track of how much you use the REX and only stick in a claim for journeys where the distance is over the battery range. I've got a 160 mile drive to my client site, stay there for 2 weeks and come back for the weekend. So I definetely need to be getting something for fuel.

Wasn't happy when I got home and spotted on the invoice "SEAL : Seal and Protect £524!" LOL that will be coming off.[/quote]

Not sure how you get to £21k. The £38k is reduced to £33 by the government grant, then you will get 20% of that against corporation tax, which is £6,600. Are you including the zero road tax and tax relief on contract purchase interest costs? Am I missing something?

I intend to claim 14p per mile as a hybrid. I have to pay for the electric (albeit much less than petrol) and it is not my fault that HMRC have not come up with a figure for electric. If I am running the Rex, as I will on some trips, I will only be getting 30-40mpg (why is that when you can get in excess of 50mpg when you put it in their scooter?). Therefore, the only option is to charge 14p per mile and the government benefit from us helping them with their clean air commitments. I am sure they will base BIK on the full £38k as well, not on the amount we actually pay. And once they have got us into electric they will doubtless tax us to the hilt again!

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