Company car

jeff lebowski

Hi,

I own a new Ltd Company (1 yr old) and I am planning on buying a company car for use with the business.

Can the VAT on this be claimed back and are there any incentives for buying a low emissions car, apart from the actual cost of running it? I heard there was some scheme in the UK for that so wasn't sure if we had something like that.

Also, is motor tax and insurance deductable?

Thanks for any info.

Jeff

mkdon05

You can't claim the vat on company vehicles. I dont believe there is a VRT scheme in Ireland. Motor tax and insurance would be considered deductable expenses. Be aware that you will have to pay benefit in kind on the company car which can be considerable.
Buy a diesel, at least then you can claim the vat back on diesel you buy.


(Note: This does not constitute professional advice. For the full understanding of company vehicles and their costs/benefits involved, contact your accountant)

jeff lebowski

Thanks for the reply, I'm meeting my accountant next week but just wanted to get a general idea.

Is BK only applicable if the car is for personal use though? We already have a car for our own use and this would be for business use.

Stheno

jeff lebowski wrote: »

Thanks for the reply, I'm meeting my accountant next week but just wanted to get a general idea.

Is BK only applicable if the car is for personal use though? We already have a car for our own use and this would be for business use.

I'd a company car and had to BIK on it, it varied depending on the mileage that was done, the higher the mileage the lower the BIK

nompere

jeff lebowski wrote: »

Thanks for the reply, I'm meeting my accountant next week but just wanted to get a general idea.

Is BK only applicable if the car is for personal use though? We already have a car for our own use and this would be for business use.

In general BIK is charged at 30% to 40% of the original market value of the car, depending on the car's emissions, and those percentages get reduced, but never eliminated, once your annual business mileage exceeds 24,000 kilometres per annum

If you don't exceed 24,000 km of business use you pay full BIK, even if you do no private travel in the car.

jeff lebowski

So if my company buys a car for, say, €20,000 I have to pay 30% + Benefit in Kind even if the car is used exclusively for company use?

nompere

jeff lebowski wrote: »

So if my company buys a car for, say, €20,000 I have to pay 30% + Benefit in Kind even if the car is used exclusively for company use?

Not necessarily. It's actually the original market value of the car. So if it was €40,000 when new, and the company buys it for €20,000, the BIK is still worked out on €40,000. And if it has high emissions, then it you'll pay tax on €16,000 (€40,000 @ 40%) per year.

It's not just tax on the BIK - it's liable to PRSI and USC as well.

Marcusm

nompere wrote: »

In general BIK is charged at 30% to 40% of the original market value of the car, depending on the car's emissions, and those percentages get reduced, but never eliminated, once your annual business mileage exceeds 24,000 kilometres per annum

If you don't exceed 24,000 km of business use you pay full BIK, even if you do no private travel in the car.

If the employee is not entitled to make "private use" of the car and does not, in fact, use it privately, no BIK charge is levied. Private use would include travelling from home to work and, while theoretically no BIK would necessarily be due in the circumstances you suggest, I do not think that the Revenue would accept no BIK charge in the context of a proprietary director.

dbran

mkdon05 wrote: »

You can't claim the vat on company vehicles. I dont believe there is a VRT scheme in Ireland. Motor tax and insurance would be considered deductable expenses. Be aware that you will have to pay benefit in kind on the company car which can be considerable.
Buy a diesel, at least then you can claim the vat back on diesel you buy.


(Note: This does not constitute professional advice. For the full understanding of company vehicles and their costs/benefits involved, contact your accountant)

Hi

Since 2009, up to a maximum of 20% of the VAT on motor vehicles can be reclaimed subject to certain conditions.

http://www.revenue.ie/en/tax/vat/refunds/vat-reclaims-faqs.html

Hope this helps

dbran

blackwhite

Marcusm wrote: »

If the employee is not entitled to make "private use" of the car and does not, in fact, use it privately, no BIK charge is levied. Private use would include travelling from home to work and, while theoretically no BIK would necessarily be due in the circumstances you suggest, I do not think that the Revenue would accept no BIK charge in the context of a proprietary director.

This....

You need to be very careful about the "private use" element though. Things revenue have look at in the past is how many drivers have access to the vehicle. Where the vehicle is stored outside of business hours, etc.

If you are the only person working in the company, and the business premises is your home, then you could encounter difficulty claiming "no personal use" if Revenue ever investigated.

As others have said, consult your accountant armed with all of the details.

radharc

Just a quick question on this topic
Does the BIK charged on company cars include an element for fuel use? IE Can I purchase all fuel for a company car (both private & business use) through the company?

blackwhite

radharc wrote: »

Just a quick question on this topic
Does the BIK charged on company cars include an element for fuel use? IE Can I purchase all fuel for a company car (both private & business use) through the company?

BIK is effectively taxing the benefit of having the car for personal use.

Yes, normal practice would be for all running costs (including fuel) to be paid by the company.

In a case where the company requires the employee to make a contribution towards the running costx, the employee can claim a tax credit for the amount of the contribution (so long as its not greater than the BIK).
The credit is only claimable if the employee pays the contribution direftly to the company. I.E. topping up the car with €50 of diesel wouldnt earn a tax credit, but taking a €50 deduction in wages each month as a contribution for personal fuel would earn a tax credit.

radharc

Thanks blackwhite

Just a quick follow up, is it acceptable for the employee to buy the fuel himself and be reimbursed by the company?

Also can the company reclaim VAT on all diesel (ie regardless of whether the fuel is to be used for business purpose or not)?

Cheers!

blackwhite

radharc wrote: »

Thanks blackwhite

Just a quick follow up, is it acceptable for the employee to buy the fuel himself and be reimbursed by the company?

Also can the company reclaim VAT on all diesel (ie regardless of whether the fuel is to be used for business purpose or not)?

Cheers!

No problem with the company reimbursing the employee. The BIK covers the tax exposures on that.

I'm not 100% on the company being allowed to claim the VAT or not, its a few years since I did my FAEs, and I don't work in tax.

I only know the BIK rules because I have a company car myself .