Is there a tax break on buying a company car?

HBC08

I'm struggling to get any info on this. We're buying a car through our business (a pub). Is there a tax break or VAT back element to this?
If so must the car be bought from a dealer specifically or can it be a private sale. Apologies for the clueless nature of this post but boardies are good for this kind of thing!

bazz26

Your accountant should be advising you on what you can and cannot avail of through your business.

HBC08

For sure but not getting a clear answer and found car we want to buy this evening,have arranged to meet her later in the week. Just thought I'd throw it out there

MightyMunster

Your company buys the car out of pre tax income. Therefore you don't have to pay tax on the amount you've spent.

HBC08

MightyMunster wrote: »

Your company buys the car out of pre tax income. Therefore you don't have to pay tax on the amount you've spent.

Thanks for reply. So therefore it makes no difference if I buy from garage or private dealer?

colm_mcm

You’d surely have to pay BIK on it yourself?

Do pubs use cars usually?

colm_mcm

colm_mcm wrote: »

You’d surely have to pay BIK on it yourself?

Do pubs use cars usually?

Pool car for the pub business

Cows Go µ

Check you can get insurance first. It's easy to get insurance in the company name for a van or a fleet but there's only a few companies that do it for a single car. It might be more expensive so negate any tax savings.

Plus, you'd generally have to sign over your personal bonus and you can't get it back while the company is active.

(That's assuming that you are buying a car through the company to save money rather than using a car in your own name and just adding business cover)

Atlantic Dawn

Surely the best way to go is to lease a new car through the pub for your use?

James Bond Junior

Buy the car privately and claim on the mileage. That said my gut tells me a publican may not be able to convince revenue of that...

Henry Ford III

There's much cluelessness here. If a Ltd. Co. buys a car there are quite a few tax consequences. Deductions against profit might include capital allowances & running costs. There's also potential bik (no such thing as pool cars according to Revenue).

Running a diesel van or pick up/crew cab might be the optimal solution?

Henry Ford III

https://www.maneelymccann.ie/factsheets/corporate-and-business-tax/business-motoring-tax-aspects

This is excellent - it's quite a complex area.

drunkmonkey

Dunno if the "pool car" will wash with the revenue a pool bus maybe, You could go electric as there's 0% BIK but you'll probably end up pushing it around.
Don't forget the BIK is on the new price of a car, so a 5k car could potentially end up costing you a lot in BIK if it was 100k new.

Not sure if they tightened the rules on crew cabs but it's worth a look.

Marcusm

MightyMunster wrote: »

Your company buys the car out of pre tax income. Therefore you don't have to pay tax on the amount you've spent.

That’s just so wrong. The company does not get a deduction for the purchase price of a car. At best it gets capital allowances spread over a number of years while the individual picks up a BIK charge based on the original market value of the car. A complete non-runner except for EVs and new cars (or very old cars with low OMVs).

R.O.R

If you buy a car with a VAT invoice, through a business, you can recover 20% of the VAT, if the vehicle will be used at least 60% of the time in connection with the business and the Co2 emissions are under 156g/km.

As this sounds like it's a used car in a private sale, there won't be a VAT invoice and therefore no recoverable VAT.

Most used cars in Ireland will not have a VAT invoice, unless they were previously Rental or Leased vehicles.

Henry Ford III

Henry Ford III wrote: »

no such thing as pool cars according to Revenue.

There certainly is pool cars, probably not an easy route for the op (and I was half joking suggesting it) but plenty of people up and down the country pay no BIK on cars/jeeps etc which are a shared resource for the business rather than assigned to an individual.

Now there are many rules which are supposed to be adhered to but from the people I know of driving "pool" cars as their own vehicle it doesn't look very difficult to get away with (not that I'm condoning it or anything).

AndrewJRenko

Meadow Drab Jawbreaker wrote: »

Now there are many rules which are supposed to be adhered to but from the people I know of driving "pool" cars as their own vehicle it doesn't look very difficult to get away with (not that I'm condoning it or anything).

As with all forms of tax fraud, the fact that someone got away with something last year does not mean that they will get away with it this year. When Revenue do focus in, they may face punitive interest and penalties on their historical fraud.

AndrewJRenko

AndrewJRenko wrote: »

As with all forms of tax fraud, the fact that someone got away with something last year does not mean that they will get away with it this year. When Revenue do focus in, they may face punitive interest and penalties on their historical fraud.

People know its a particularly difficult one to enforce, short of a large scale surveillance effort by revenue its basically impossible to prove especially when you are talking about business owners who don't just work 9 to 5, work in different locations etc etc.

Homer

drunkmonkey wrote: »

Not sure if they tightened the rules on crew cabs but it's worth a look.

A crew cab has seats behind the driver and therefore doesn't meet revenues definition of a van unfortunately! I tried to get a crew cab for myself and my accountant informed me that it would be the much higher BIK rated so I went down the mileage/expenses route and purchased a vehicle privately.

Henry Ford III

From Revenue....on pool cars (I was incorrect they do exist but....)....

Definitions for exemption.....

a car is available and used by more than one employee

the car must not be regularly used by one employee who prevents others from using it

private use of the car by the employee is minimal

the car is not regularly kept overnight at or near the employee’s home.

AndrewJRenko

Meadow Drab Jawbreaker wrote: »

People know its a particularly difficult one to enforce, short of a large scale surveillance effort by revenue its basically impossible to prove especially when you are talking about business owners who don't just work 9 to 5, work in different locations etc etc.

In this case, it's a pub, so it's not going to be that difficult to prove. Isn't the obligation on the taxpayer to prove Revenue wrong? So if you can't produce evidence to meet the requirements of a pool car, it's your problem.

L1011

Henry Ford III wrote: »

From Revenue....on pool cars (I was incorrect they do exist but....)....

Definitions for exemption.....

a car is available and used by more than one employee

the car must not be regularly used by one employee who prevents others from using it

private use of the car by the employee is minimal

the car is not regularly kept overnight at or near the employee’s home.

All pretty common for where there's branded vehicles; this is not some edge case - there's probably thousands of pool cars around.

I have full use of our company pool (a whole 8, 3 of which are EV anyway); have never brought one home and think I've made one private journey out of hundreds in them so no BIK considerations.

There was one staff member who was possibly getting close to the "prevents others from using it" level, so he now has to return the keys every evening unless he can explain why he needs them!