New company, new car?

NMcG85

Hi,

I have been trailing through the forums, trying to figure out the best practice for buying a company car.

Company has 2 directors , myself and the Wife,

I have come to the conclusion that I can buy a Discovery (imported or here) which is to be down as a pooled car --- therefore no BIK ( it will only be used for the company as we have our own private cars, The VAT is reclaimable etc....

But now .. What is the best way to do it, get a loan? lease the vehicle? or buy it out straight?

Apologies .. I am new the the New Company scenario and just want to start off on the right foot !! In have asked my accountant but they dont now ..

Thanking you for your help
N

Gerry T

NMcG85 wrote: »

Hi,

I have been trailing through the forums, trying to figure out the best practice for buying a company car.

Company has 2 directors , myself and the Wife,

I have come to the conclusion that I can buy a Discovery (imported or here) which is to be down as a pooled car --- therefore no BIK ( it will only be used for the company as we have our own private cars, The VAT is reclaimable etc....

But now .. What is the best way to do it, get a loan? lease the vehicle? or buy it out straight?

Apologies .. I am new the the New Company scenario and just want to start off on the right foot !! In have asked my accountant but they dont now ..

Thanking you for your help
N

Remember if its a company owned car, the car needs to meet the commercial vehicle requirement to be able to claim the VAT on the purchase. When you sell the car you will have to deduct the VAT in the price you get from the sale and give it to the tax man. You mention discovery so you may know this.

So if leasing I don't know how you can get the lease/loan to repay if you hold the title to the car, I'd be interested myself to see if there's lending agencies out there that will take some form of collateral against the lease.

spyderski

NMcG85 wrote: »

Hi,

I have been trailing through the forums, trying to figure out the best practice for buying a company car.

Company has 2 directors , myself and the Wife,

I have come to the conclusion that I can buy a Discovery (imported or here) which is to be down as a pooled car --- therefore no BIK ( it will only be used for the company as we have our own private cars, The VAT is reclaimable etc....

But now .. What is the best way to do it, get a loan? lease the vehicle? or buy it out straight?

Apologies .. I am new the the New Company scenario and just want to start off on the right foot !! In have asked my accountant but they dont now ..

Thanking you for your help
N

If you want no BIK it needs to be a 2 seater commercial (or a car that derives its propulsion from electric motor only). VAT is reclaimable. You should also look at getting a new accountant.

Heres Johnny

Yes Jesus if your accountant didn't know I would be changing him pretty quickly!

There's no best way to pay for it in general, but there is a best way for you based on your circumstances and you should be given options and talked through them by your accountant or business/financial advisor.

Is he even an accountant?

JackieChan

+1 on accountant advice!! Don't forget a pooled car can't be kept at an employees house overnight - as otherwise it wouldn't really be a pooled car!!

Gerry T wrote: »

So if leasing I don't know how you can get the lease/loan to repay if you hold the title to the car, I'd be interested myself to see if there's lending agencies out there that will take some form of collateral against the lease.

You don't hold title if it's leased, the leasing co. do, you just claim back the allowable VAT element on each payment made to them.

Gerry T

JackieChan wrote:

You don't hold title if it's leased, the leasing co. do, you just claim back the allowable VAT element on each payment made to them.

I appreciate that. I think I didn't explain myself properly.
Im not sure if this can be done, but ideally you get a very low interest loan so you purchase the car (commercial vehicle class), this way you can claim the vat on the car. Then can you claim the loan repayments as a business expense and any vat on the loan could also be claimed?
I would suspect when selling the car you would have to pay back from the sales price the proportion of vat due. But if you held the car for say 5yrs,it's still far less than the amount claimed the day you bought the car.
Also can the cars depreciation be calculated into the accounts?

spyderski

Gerry T wrote: »

I appreciate that. I think I didn't explain myself properly.
Im not sure if this can be done, but ideally you get a very low interest loan so you purchase the car (commercial vehicle class), this way you can claim the vat on the car. Then can you claim the loan repayments as a business expense and any vat on the loan could also be claimed?
I would suspect when selling the car you would have to pay back from the sales price the proportion of vat due. But if you held the car for say 5yrs,it's still far less than the amount claimed the day you bought the car.
Also can the cars depreciation be calculated into the accounts?

Why would you get a low interest rate loan?
Of course you can claim the VAT.
It will not be a car, it will be a van (or 2-seat commercial with a goods carrying area behind the front seats), assuming you want to reduce BIK as per your OP.
The loan repayments ARE a business expense.
You have to charge VAT on resale.
Of course depreciation is accounted for. Straight line over 5 years usually, although there are alternative ways of treating it.

You REALLY need to speak to an accountant. You have formed a company and become a director, without knowing basic principles of how the accounts of a limited liability company work.

Gerry T

spyderski wrote:

Why would you get a low interest rate loan? Of course you can claim the VAT. It will not be a car, it will be a van (or 2-seat commercial with a goods carrying area behind the front seats), assuming you want to reduce BIK as per your OP. The loan repayments ARE a business expense. You have to charge VAT on resale. Of course depreciation is accounted for. Straight line over 5 years usually, although there are alternative ways of treating it.

Why would you not look for a low interest loan?
I'm not the OP
I was asking could you claim the loan.
The point on the sale of the car went over your head. You sell for market price, if that's 20k then part of that is the vat, so the company doesn't realise the full 20k

spyderski wrote:

You REALLY need to speak to an accountant. You have formed a company and become a director, without knowing basic principles of how the accounts of a limited liability company work.

Again I'm not the OP

0lddog

Has anyone mentioned that there is zero BIK on 'leccy cars ?

Also ACA may apply

drunkmonkey

If you don't need a car as both you and your wife have one why would you by a 3rd?

Financially keeping your car private and charging the company milage might be a better way to go. You can drive what you want that way and get tax free money out of the company.
The more expensive a car was new the more this makes sense as even if you bought an old 7 series through the bik system you'd be paying bik as if it was new. Your better off claiming milage depending on what your buying.

drunkmonkey

Oh and if your getting a loan there's a new Brexit loan coming out at a cheap interest rate you may be able to avail of.
If I'm changing my car it's that loan I'll be using https://sbci.gov.ie/sbci-seeks-lending-partners-new-e300-million-brexit-loan-scheme

spyderski

Gerry T wrote: »

Again I'm not the OP

Sorry, thought you were.

spyderski

0lddog wrote: »

Has anyone mentioned that there is zero BIK on 'leccy cars ?

Also ACA may apply

Yep. I did.

“If you want no BIK it needs to be a 2 seater commercial (or a car that derives its propulsion from electric motor only).“

return guide

BIK is 5% on 2 seater commercials