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Ltd Contractor: Compare Company Car to Commercial

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  • 18-02-2013 8:05pm
    #1
    19driver83
    Registered Users Posts: 164 ✭✭


    I am a one man Ltd company. I work as anengineering contractor and only work for one company.

    Upto now I have been using my personal car and claiming expenses out of the company.

    I want to investigate buying a company car versus a commercial vehicle.

    A company car attracts BIK which appears relatively straight forward linked to the Original Open Market Value and Annual Businees Km.
    Q1: Can you claim the VAT back on the purchase of car?
    Q2: Can you claim the VAT back on the diesel?
    Q3: Can you claim the VAT back on maintenance?
    Q4: If the company pays the Road tax, Insurance, fuel and maintenance is this value then subject to BIK?
    Q5:Can you claim capital allowances on the purchase. If so is this reduced due to personal use?

    A commercail Vehicle;
    Q1: Can you claim the VAT back on the purchase of vehicle?
    Q2: Can you claim the VAT back on the diesel?
    Q3: Can you claim the VAT back on maintenance?
    Q4: If the company pays the Road tax, Insurance, fuel and maintenance is this value then subject to BIK?
    Q5: Is it accurate to say that the BIK on commercial vehicle is 5% across the board?
    Q6:Can you claim capital allowances on the purchase. If so is this reduced due to personal use?

    Please add to this or give your experiences.


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    #2
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    Hi,

    Instead of reposting this comment I am going to refresh as I have the same query.

    I am currently set up as a Limited Company - contracting as an engineer to pharmaceutical company.

    I currently have a commercial vehicle that I own privately myself - I claim insurance and tax on the vehicle.

    I now need to get a new vehicle and would like to go down the route of buying the commercial vehicle through the Limited Company. However, my accountant is not really in favour of it, as I would need to pay BIK tax on the vehicle through the company and it 'gets messy'.

    I was just wondering if anyone could shed any light on this. I would have thought buying the commercial vehicle through the company would have been financially better as the saving I would have made on VAT vs the BIK tax?


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    #3
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    babystrawberry wrote: »
    Hi,

    Instead of reposting this comment I am going to refresh as I have the same query.

    I am currently set up as a Limited Company - contracting as an engineer to pharmaceutical company.

    I currently have a commercial vehicle that I own privately myself - I claim insurance and tax on the vehicle.

    I now need to get a new vehicle and would like to go down the route of buying the commercial vehicle through the Limited Company. However, my accountant is not really in favour of it, as I would need to pay BIK tax on the vehicle through the company and it 'gets messy'.

    I was just wondering if anyone could shed any light on this. I would have thought buying the commercial vehicle through the company would have been financially better as the saving I would have made on VAT vs the BIK tax?

    Who pays for the diesel and maintenance costs under your current setup??


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    #4
    Lockedout2
    Registered Users Posts: 402 ✭✭Lockedout2


    I'd imagine that youre looking at a crew cab or discovery type vehicle that attracts a VAT refund but is a car for BIK purposes?


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    #5
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    barneystinson wrote: »
    Who pays for the diesel and maintenance costs under your current setup??

    I am paying for the diesel and maintenance etc through the Ltd company


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    #6
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    Lockedout2 wrote: »
    I'd imagine that youre looking at a crew cab or discovery type vehicle that attracts a VAT refund but is a car for BIK purposes?

    Its a (commercial) jeep that I would like to buy through the company. My accountant has said that I would have to pay BIK on a vehicle should I decide to buy it through the Ltd company? I presume that any commercial jeep/vehicle I would buy through the company would allow the VAT refund?


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    #7
    barneystinson
    Registered Users Posts: 4,683 ✭✭✭barneystinson


    babystrawberry wrote: »
    I am paying for the diesel and maintenance etc through the Ltd company

    Sorry, but that's clear as mud! You need to start distinguishing between "I" the company, and "I" the individual. Failure to do that can be very costly.

    You, the individual, aren't paying for diesel and maintenance through the company, if the company is paying for it.


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    #8
    Lockedout2
    Registered Users Posts: 402 ✭✭Lockedout2


    babystrawberry wrote: »
    Its a (commercial) jeep that I would like to buy through the company.

    Does it have back seats?


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    #9
    OttoPilot
    Registered Users Posts: 540 ✭✭✭OttoPilot


    Would it be considered a vehicle only suitable for work purposes ie a van or do people drive it privately?


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    #10
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    barneystinson wrote: »
    babystrawberry wrote: »
    I am paying for the diesel and maintenance etc through the Ltd company

    Sorry, but that's clear as mud! You need to start distinguishing between "I" the company, and "I" the individual. Failure to do that can be very costly.

    You, the individual, aren't paying for diesel and maintenance through the company, if the company is paying for it.
    Apologies for the confusion with that. The company pays for the diesel and maintenance costs.


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    #11
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    Lockedout2 wrote: »
    babystrawberry wrote: »
    Its a (commercial) jeep that I would like to buy through the company.

    Does it have back seats?
    My current jeep does not have back seats.

    I am considering buying a crew cab - this does have back seats but is still classed as commercial as far as I know


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    #12
    babystrawberry
    Registered Users Posts: 292 ✭✭babystrawberry


    OttoPilot wrote: »
    Would it be considered a vehicle only suitable for work purposes ie a van or do people drive it privately?
    It is a vehicle that I would be using to drive to and from work - I could say that I drive it onsite at work also.

    It will be used for private use


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    #13
    what recession?
    Registered Users Posts: 110 ✭✭what recession?


    babystrawberry wrote: »
    It is a vehicle that I would be using to drive to and from work - I could say that I drive it onsite at work also.

    It will be used for private use
    Driving to and from work (i.e. from home to work and back) is strictly private use.
    babystrawberry wrote: »
    My current jeep does not have back seats.

    I am considering buying a crew cab - this does have back seats but is still classed as commercial as far as I know
    Crewcabs (e.g. Land Rover Discovery) are classed as commercial for VRT/VAT purposes but are classed as passenger vehicles for the purpose of BIK - therefore you will be paying an arm and a leg unless you are doing a ton of allowable business mileage. As stated above, driving to and from work is not business mileage.


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    #14
    Mc-BigE
    Registered Users Posts: 1,033 ✭✭✭Mc-BigE


    Sorry to butt in on this thread, but its kind of a pet subject of mine lol.

    the Revenues website is vague in my opinion with the definition of a van for BIK purposes,

    the N1 5 seater commercials has a goods area, with no windows or seats and it is "to the rear" of the vehicle, ie behind the second row of seats.

    if the revenue wanted to be precise about it they should have "directly behind driver seat" or "no rear seats behind the drivers seat"

    i know its splitting hairs, but if its not in exact writting , then its open to interpretation by the motor industry, accountants , solicitors, company directors etc.

    links to revenue pages regarding BIK on vans

    Meaning of a " van"
    http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/private-use-vans.html#section3

    from above "Where a crew cab or other similar type of vehicle meets all of these criteria it would be regarded as a van rather than a car"

    Meaning of a "car"
    http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/private-use-cars.html#section3

    and from above "This includes all cars within the ordinary meaning of the word, crewcabs and jeeps but excludes hearses and lorries"

    notice how the N1 5 seater commercial fits into both definitions

    section regarding changing car to N1 commercial: www.revenue.ie/en/tax/it/leaf...les.html#car13

    vehicle classification for VRT ( N1 - Category C )
    http://www.revenue.ie/en/tax/it/leaflets/benefit-in-kind/faqs/company-vehicles.html#car13


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    #15
    Lockedout2
    Registered Users Posts: 402 ✭✭Lockedout2


    A van means a mechanically propelled vehicle which –
    is designed or constructed solely or mainly for the carriage of goods or other burden, and
    has a roofed area or areas to the rear of the driver's seat, and
    has no side windows or seating fitted in that roofed area or areas.

    I can't understand why people choose to ignore this fundamental point. These vehicles clearly have a roofed area to the rear of the drivers seat and there are seats and windows in that roofed area. Therefore are cars for BIK but commercial for VAT, VRT and motor tax.

    I would agree that the use of the term crew cab is very unhelpful.

    I think that what will happen is that Revenue will withdraw the right of repayment for VAT sooner rather than later.


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    #16
    Mc-BigE
    Registered Users Posts: 1,033 ✭✭✭Mc-BigE


    The thing is every crew cab has a roof area to the rear of drivers seat, it also has seats for extra workers or crew. So it's silly for the website to mention that some crew cabs are vans and others are cars when all crew cabs have seats in this roofed area. So it is easy to assume that the revenue are taking about the roofed area behind the crew seats

    Badly worded website, and to be honest a lot of people are interpreting it differently


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