Benefit in kind advantages with 2nd Hand Tesla Model S?

blobert

Hi Guys,

Sorry if I'm asking about somthing that's been covered before but I can't seem to find a clear answer on it.

With the 0% BIK on Electric Cars (and I believe it applies to 2nd hand cars also) how would it work if I wanted to buy a 2nd hand Tesla Model S for about €40,000 for example?

What would the respective saving vs me buying the same car with my post tax salary vs my company buying it for me be?

Any advice would be much appreciated!

Thanks

Wildly Boaring

Don't quite understand.

If your company buys it. And you drive it, at 0% BIK it costs you nothing.

If you buy it, it costs you 40k.

Assume there is more to this. Sorry

unkel

Your company buys a car for you to use. New or second hand doesn't matter. You pay income tax over the value of this benefit (BIK). But with an EV you pay nothing.

Bionicleg

blobert wrote: »

What would the respective saving vs me buying the same car with my post tax salary vs my company buying it for me be?

That’s the way I looked at it when I did the same as you are planning. I also weighed up loss of mileage expenses on my private car that my company paid me. I got a s 3 months ago and am very happy with it and the “no bik”

Wildly Boaring

Bionicleg wrote: »

That’s the way I looked at it when I did the same as you are planning. I also weighed up loss of mileage expenses on my private car that my company paid me. I got a s 3 months ago and am very happy with it and the “no bik”

Ah so mileage expenses v no BIK.
What annual mileage? Business? Private?

blobert

Thanks for the replies guys

So that sounds like it would be of benefit then

In theory if I want to have 40k to buy my car I'll have to have paid myself circa 80k to get this 40k after tax.

If the company buys it for me then this is avoided.

However the company now owns the car as opposed to me as an individual which I'm guessing causes issues later.

So how does it work if I (or rather my company) want to sell the car after 2 years for example?

And just to say I do minimal mileage for work, so the loss of that (maybe €600 or less a year) would be fairly minimal

Thanks again for the advice guys!

Bionicleg

blobert wrote: »

Hi Guys,

Sorry if I'm asking about somthing that's been covered before but I can't seem to find a clear answer on it.

With the 0% BIK on Electric Cars (and I believe it applies to 2nd hand cars also) how would it work if I wanted to buy a 2nd hand Tesla Model S for about €40,000 for example?

What would the respective saving vs me buying the same car with my post tax salary vs my company buying it for me be?

Any advice would be much appreciated!

Thanks

Wildly Boaring wrote: »

Ah so mileage expenses v no BIK.
What annual mileage? Business? Private?

Yes, but I figured 1000e of mileage expenses actually cost me 8 to 900e. So not much loss and less paperwork logging trips.

I don’t understand your next question. Another way of looking at it is, it’s the only way I could afford one. If you like the car, I think it’s a no brainer.

Bionicleg

blobert wrote: »

Thanks for the replies guys
So that sounds like it would be of benefit then
In theory if I want to have 40k to buy my car I'll have to have paid myself circa 80k to get this 40k after tax.
If the company buys it for me then this is avoided.
However the company now owns the car as opposed to me as an individual which I'm guessing causes issues later.
So how does it work if I (or rather my company) want to sell the car after 2 years for example?
Thanks again for the advice guys!

I’m looking at writing off the devaluation against tax on company profit.

If you buy new, you can write off 100% of cost against tax in first year, providing you make that much profit, so even better tax gains for new cars.

Company insurance will be more expensive but it’s a company cost not a net after tax cost of private car.

If you charge at work, elec is company cost too.

blobert

Bionicleg wrote: »

blobert wrote: »

Thanks for the replies guys
So that sounds like it would be of benefit then
In theory if I want to have 40k to buy my car I'll have to have paid myself circa 80k to get this 40k after tax.
If the company buys it for me then this is avoided.
However the company now owns the car as opposed to me as an individual which I'm guessing causes issues later.
So how does it work if I (or rather my company) want to sell the car after 2 years for example?
Thanks again for the advice guys!

I’m looking at writing off the devaluation against tax on company profit.

If you buy new, you can write off 100% of cost against tax in first year, providing you make that much profit, so even better tax gains for new cars.

Company insurance will be more expensive but it’s a company cost not a net after tax cost of private car.

If you charge at work, elec is company cost too.

Thanks, talk me though how that would work?
Let's say company makes 200k profit so not an issue and it spends 100k on a new Model X for me.
I pay no BIK on this.

Let's say I/company want to sell this after 2-3 years, how does it work?
I'm assuming, like with all cars, owning it from new and selling it 2-3 years later will mean you/the company is taking a massive whack in depreciation, whereas as buying a 2-3 year old car and trading in every year or two will always be the least loss making way of doing it?

Marcusm

unkel wrote: »

Your company buys a car for you to use. New or second hand doesn't matter. You pay income tax over the value of this benefit (BIK). But with an EV you pay nothing.

If it wasn’t an EV then it would make a difference as BIK is calculated on original market value rather than purchase price. For a non-EV a secondhand car (orig cost of €80k) purchased for €40k will have a substantially higher BIK (and this income tax cost) than a car purchased new for that price.

Expectation, based on the Tax Strategy papers recently issued by DoF is that 0% BIK will be extended beyond 2018 for perhaps 2-3 years then phased back in (this is specifically suggested by the civil servants). There seems not to be any desire to incentivise EV purchase on a ling term basis.

hatrack

Bionicleg wrote: »

I’m looking at writing off the devaluation against tax on company profit.

If you buy new, you can write off 100% of cost against tax in first year, providing you make that much profit, so even better tax gains for new cars.

Company insurance will be more expensive but it’s a company cost not a net after tax cost of private car.

If you charge at work, elec is company cost too.

Company can write off a maximum of €24,000 so you won’t get a tax deduction for the full cost of a Tesla in year one.

Bionicleg

What about the ACA grant for EV's from SEAI?

maclek

hatrack wrote: »

Company can write off a maximum of €24,000 so you won’t get a tax deduction for the full cost of a Tesla in year one.

Do you have a source for that? First I've heard of it.

blobert

Thanks again for the replies guys
Can someone clarify what happens when it comes to selling the company car after 2 years.
So my compnay buys me the used car, I use it for 2 years then want to sell it and buy another newer car.
Do I buy it from the company and then sell it privately? Presumably I can't advertise it in Done Deal, and then have to invoice the buyer from my company?
Thanks

Bionicleg

blobert wrote: »

Thanks again for the replies guys
Can someone clarify what happens when it comes to selling the company car after 2 years.
So my compnay buys me the used car, I use it for 2 years then want to sell it and buy another newer car.
Do I buy it from the company and then sell it privately? Presumably I can't advertise it in Done Deal, and then have to invoice the buyer from my company?
Thanks

Your accountant is best person for these questions, but afaik the car is a company asset, so money for sale goes back into company account or traded in against next company car.

I can’t see why you can’t sell it on done deal, as long as money goes back into company account. If the 0 % bik suddenly ends, I’ll be buying mine off my company for a good price and using and claiming mileage.

RobAMerc

maclek wrote: »

Do you have a source for that? First I've heard of it.

I was told same by my accountant and the Nissan dealer ( its capped at 24k )

Casati

Bionicleg wrote: »

Your accountant is best person for these questions, but afaik the car is a company asset, so money for sale goes back into company account or traded in against next company car.

I can’t see why you can’t sell it on done deal, as long as money goes back into company account. If the 0 % bik suddenly ends, I’ll be buying mine off my company for a good price and using and claiming mileage.

I’m guessing unless you sell it to a dealer that revenue won’t like you selling it cheap from the company to a connected individual, presume the lowest price would be allowing 20% straight line depreciation - the accountant would have to clarify?

You can sell it to an individual and provide him a receipt and account for it as an asset disposal but if it’s very cheap (eg 30% of the cost a year later) Is say revenue will be asking why

If you have the profit in the company and are planning to buy anyway it’s a no brained to but through the company. I believe all expenses inc tolls and parking, valet and servicing will be valid company costs rather than your own expenses after tax

air

Is there not a clawback on the ACA on disposal also? Otherwise you could buy the car, claim full allowance and sell it shortly afterwards for a similar amount banking tax free profits.
I understood that the ACA generally just provided a cash flow advantage by front loading the depreciation but that it is clawed back if disposed before being fully depreciated in the normal manner over 8 years or whatever.

ted1

Casati wrote: »

Bionicleg wrote: »

Your accountant is best person for these questions, but afaik the car is a company asset, so money for sale goes back into company account or traded in against next company car.

I can’t see why you can’t sell it on done deal, as long as money goes back into company account. If the 0 % bik suddenly ends, I’ll be buying mine off my company for a good price and using and claiming mileage.

I’m guessing unless you sell it to a dealer that revenue won’t like you selling it cheap from the company to a connected individual, presume the lowest price would be allowing 20% straight line depreciation - the accountant would have to clarify?

You can sell it to an individual and provide him a receipt and account for it as an asset disposal but if it’s very cheap (eg 30% of the cost a year later) Is say revenue will be asking why

If you have the profit in the company and are planning to buy anyway it’s a no brained to but through the company. I believe all expenses inc tolls and parking, valet and servicing will be valid company costs rather than your own expenses after tax

Selling private means you need to charge VAT. selling to a company it’s ex vat.
That’s say you sell for 50k to a joe soap well 23% goes to VATman. Selling to a company you get 50 and VAT is extra

air

The VAT element is irrelevant, the company has to charge vat on the disposal either way and isn't impacted whether or not the buyer ultimately reclaims the VAT.
The only way the company could sell it ex VAT would be if it was being exported to another EU country, which seems unlikely.

drunkmonkey

Any advantage in buying a UK vat qualifying one like this

Tesla Model S 85KW
£42,950 VAT Qualifying
Tax Free Export Price: £35791
https://www.dhada.com/used-cars

Drive it for 2 years and you can reclaim 20% of the vat when you buy it I think but is there any other advantage as it's a EV.