Tax implications of having a EV company car

Cyrus

Specifically one of the ones over the 50k threshold.

im trying to think of ways to utilise any available tax breaks going and while we dont do co cars and i have no business need for a car, i presume i could get the co to lease me one if it makes sense from a tax perspective.

For arguments sake if it was something like a Jag I pace at 91k (SE with black pack). I presume that thats the pre vrt rebate price? So whats the total price for BIK calculations?

Then i pay BIK on the delta between that price and 50k at 30%? Plus have to forego the cost to the company of leasing the thing in bonus for example.

Its probably not feasible but if anyone can help me piece it together (im sure some of the business owners here have looked at it) id appreciate it

rolion

Ask a teacher how much is 1 plus 1,answer will always be 2.
In your case,ask an accountant how much is 1+1 and he'll answer with "how much you want to be" ...

eddhorse

So the BIK is calculated on original market value.
So say it is 90k OMV, subtract the current 50k.
You pay 30% (or whatever bracket you are in depending on mileage) on 40k.
Make sure you include the SEAI grant in the OMV.
I would also wait until the budget as that 50k could possibly change.
And they have suspended SEAI Grant's in 2020.
So all up in the air unless you can get a car quickly.

drunkmonkey

You also have the accelerated capital allowance allowing you to write it all off in year one as opposed to 7yrs with a normal car.
Do you own the company?

Cyrus

drunkmonkey wrote: »

You also have the accelerated capital allowance allowing you to write it all off in year one as opposed to 7yrs with a normal car.
Do you own the company?

no i dont but the owner would be happy to facilitate a tax efficient structure as long as it was all above board.

Cyrus

eddhorse wrote: »

So all up in the air unless you can get a car quickly.

got you

drunkmonkey

Cyrus wrote: »

no i dont but the owner would be happy to facilitate a tax efficient structure as long as it was all above board.

Well then the capital allowance incentive and reduced fuel bill would be of interest to the owner.
The ipace kind of defets the bik incentive for you. There struggling to sell them it seems like a great car but the price is OTT.

Cyrus

drunkmonkey wrote: »

Well then the capital allowance incentive and reduced fuel bill would be of interest to the owner.
The ipace kind of defets the bik incentive for you. There struggling to sell them it seems like a great car but the price is OTT.

the only ones that interest me are the ipace or the etron really

and both are daft money

probably only works if you can get a car under the 50k mark

drunkmonkey

Yea the real benefit is under 50k or close to it. Have you looked at the polestar 2 launch edition if you can get your hands on one from the UK when they launch. It's a good bit cheaper than the etron and ipace and it's got serious performance.

listermint

Cyrus wrote: »

the only ones that interest me are the ipace or the etron really

and both are daft money

probably only works if you can get a car under the 50k mark

Beautiful machines though, pass by 2 everyday in traffic

Gumbo

While I can’t help with the OP question, it’s great to see the recent influx of many motoring heads into the EV scene. Many of which I remember from our days on jspeed.net, BMW Driver etc etc

Cyrus

kceire wrote: »

While I can’t help with the OP question, it’s great to see the recent influx of many motoring heads into the EV scene. Many of which I remember from our days on jspeed.net, BMW Driver etc etc

Bmw-driver

Good times !

drunkmonkey

Mike9832 wrote: »

No savings here

Depends on who's buying it, for me it's massive as it's a company car, I get to sell my own car so can knock maybe 30/35k off the mortgage and save maybe 4k in fuel a year. That's maybe 45k in my back pocket over the next 3yrs if Pascal doesn't screw with the bik incentive.
It's a no brainier at the moment it's just which car and from what's out there the id3 Max has pretty much everything I need in a car.

Mike9832

drunkmonkey wrote: »

A private buyer would be even worse off though...company has incentives, i'm just not getting why anyone would buy one.

Company driver with bik would have free diesel, with fuel card in most cases

Why would they want the hassle of charging a car?

They'll have to charge at home too, how do they get that cost back and Ionity chargers etc

If diesel was practically free I would never consider an EV

Shefwedfan

Mike9832 wrote: »

Company driver with bik would have free diesel, with fuel card in most cases

Why would they want the hassle of charging a car?

They'll have to charge at home too, how do they get that cost back and Ionity chargers etc

If diesel was practically free I would never consider an EV

Who has free diesel on a company car?

A fuel card is not free diesel

Shefwedfan

drunkmonkey wrote: »

A private buyer would be even worse off though...company has incentives, i'm just not getting why anyone would buy one.

I’m not sure what your point is

I said the exec edition Is only aimed at company cars, not private buyers

Why would someone buy one?
Well BIK is 0% so the list price doesn’t matter
It’s the best electric car in market outside an 100k Audi
All the other benefits for a company car

Mike9832

Shefwedfan wrote: »

Who has free diesel on a company car?

Any sales rep I know

All use at weekend for leisure etc

Shefwedfan

Mike9832 wrote: »

Any sales rep I know

All use at weekend for leisure etc

Don’t be telling porkies

A fuel card is not free fuel....

Remember I have a company car.....very few if any company gives free diesel and if they do it’s not on a fuel card

Mike9832

Shefwedfan wrote: »

Don’t be telling porkies

A fuel card is not free fuel....

Remember I have a company car.....very few if any company gives free diesel and if they do it’s not on a fuel card

Your in the wrong company then

Shefwedfan

Mike9832 wrote: »

Your in the wrong company then

Thierry it’s not the first time your making stuff up

A company car means vat off the diesel, that’s why people have a fuel card. Not free diesel.

Even with vat off diesel you still have BIK so unless your doing huge mileage the additional BIK hits hard on wages

That’s why electric is perfect with 0% BIK.....you can still claim a per km rate for business mileage and that is up for discussion now as government haven’t released anything yet

Why do you think all these people are moving to electric? Why would they if they had free diesel

drunkmonkey

Shefwedfan wrote: »

That’s why electric is perfect with 0% BIK.....you can still claim a per km rate for business mileage and that is up for discussion now as government haven’t released anything yet

I didn't realise that. Do you know if the company can claim back the vat on the purchase of the car couldn't find anything on the Google about it. I know you can get the capital allowance but that's different.

TitianGerm

drunkmonkey wrote: »

I didn't realise that. Do you know if the company can claim back the vat on the purchase of the car couldn't find anything on the Google about it. I know you can get the capital allowance but that's different.

If the car is used for business purposes you can claim back 25% of the Vat. There's a few rules though. Let me see can I find the correct link.

drunkmonkey

TitianGerm wrote: »

If the car is used for business purposes you can claim back 25% of the Vat. There's a few rules though. Let me see can I find the correct link.

Is it this?

With effect from 1st January 2009, any VAT- registered trader other than those mentioned
above is entitled to recover some of the Vat charged on the purchase or hire of vehicles
coming within VRT Category A, subject to certain conditions, including:
 This provision only applies to vehicles registered from 1st January 2009;
 A maximum of 20% of the VAT incurred can be reclaimed. In the case of hire or
leasing charges, a maximum of 20% of the VAT on the monthly leasing charges
may be reclaimed;
 VAT can only be reclaimed for vehicles that have a level of CO2 emissions of
less that 156g/km(i.e.CO2 emissions bands A, B and C);
 At least 60% of the vehicle’s use must be for business purposes;

TitianGerm

drunkmonkey wrote: »

Is it this?

With effect from 1st January 2009, any VAT- registered trader other than those mentioned
above is entitled to recover some of the Vat charged on the purchase or hire of vehicles
coming within VRT Category A, subject to certain conditions, including:
 This provision only applies to vehicles registered from 1st January 2009;
 A maximum of 20% of the VAT incurred can be reclaimed. In the case of hire or
leasing charges, a maximum of 20% of the VAT on the monthly leasing charges
may be reclaimed;
 VAT can only be reclaimed for vehicles that have a level of CO2 emissions of
less that 156g/km(i.e.CO2 emissions bands A, B and C);
 At least 60% of the vehicle’s use must be for business purposes;

Yup that's it. Sorry was 20% not 25%.

drunkmonkey

TitianGerm wrote: »

Yup that's it. Sorry was 20% not 25%.

It's still a lot better than the 0% i'd thought it was:D

There's a good bit in this. I'm going to use the 50k id3 max as the example and see have I got it all correct.

New ID 3 including vat & vrt - 50k

Can claim 20% of the Vat back - 11500/3 = 3833
SEAI Grant for business - 3800
VRT Grant - 5000

So cost to the company in cash terms is 37,367 before the bonus of the accelerated capital allowance against the company tax bill.

Then there's the benefit of claiming the mileage and 0% bik for the driver.

Have I that all correct anything else I might have missed...

TitianGerm

drunkmonkey wrote: »

It's still a lot better than the 0% i'd thought it was:D

There's a good bit in this. I'm going to use the 50k id3 max as the example and see have I got it all correct.

New ID 3 including vat & vrt - 50k

Can claim 20% of the Vat back - 11500/3 = 3833
SEAI Grant for business - 3800
VRT Grant - 5000

So cost to the company in cash terms is 37,367 before the bonus of the accelerated capital allowance against the company tax bill.

Then there's the benefit of claiming the mileage and 0% bik for the driver.

Have I that all correct anything else I might have missed...

I think you can only claim capital allowances on €24000 though. At least that's what it is on ice cars.

If the business allow you to charge at work they'll obviously get the Vat back on the ESB.

drunkmonkey

TitianGerm wrote: »

I think you can only claim capital allowances on €24000 though. At least that's what it is on ice cars.

Is that a specific figure or does it depend on profit in the year, i.e if you made 100k profit it 1 million does it stay the same.

Edit, I can just put the 24k in as a capital allowance to reduce the tax on profits?

TitianGerm

drunkmonkey wrote: »

Is that a specific figure or does it depend on profit in the year, i.e if you made 100k profit it 1 million does it stay the same.

It's a specific limit set by revenue. I can't link it properly now because I'm on the phone but Google Cars: Capital Allowances Part 11 and 11C.

Edit: sorry it may have been unclear. The cost of the car is limited to €24000 for capital allowance purposes. So that means you can claim 12.5% of the €25k per year.

drunkmonkey

TitianGerm wrote: »

So that means you can claim 12.5% of the €25k per year.

So that would be another 3k saving for the company in the first year. You can only claim that the once I presume under the rules as it's all being claimed in the first year.

drunkmonkey

Going at those figures again....

New ID 3 including vat & vrt - 50k

Can claim 20% of the Vat back - 11500/3 = 3833
SEAI Grant for business - 3800
VRT Grant - 5000
Accelerated capital allowance - 3k

So cost to the company in cash terms is 34,367

Then there's the benefit of claiming the mileage say 12,000km business mileage so 3306 tax free into wages with 0% bik and the vat reclaimable on the electricity used for charging if at work.

The car can then be sold after 2yrs with no liability and no vat required to be charged on the sale price.

Have I it all correct now?

OCD

drunkmonkey wrote: »

Going at those figures again....

New ID 3 including vat & vrt - 50k

Can claim 20% of the Vat back - 11500/3 = 3833
SEAI Grant for business - 3800
VRT Grant - 5000
Accelerated capital allowance - 3k

So cost to the company in cash terms is 34,367

Then there's the benefit of claiming the mileage say 12,000km business mileage so 3306 tax free into wages with 0% bik and the vat reclaimable on the electricity used for charging if at work.

The car can then be sold after 2yrs with no liability and no vat required to be charged on the sale price.

Have I it all correct now?

AFAIK, you can't claim mileage from a company and benefit from BIK unless the company doesn't pay all the other costs like insurance, fuel, tyres, etc.

Could be wrong though.

drunkmonkey

OCD wrote: »

AFAIK, you can't claim mileage from a company and benefit from BIK unless the company doesn't pay all the other costs like insurance, fuel, tyres, etc.

Could be wrong though.

Even paying the insurance and fuel it still would be worth claiming the mileage, got a quote on a 15 Model s p85d yesterday and it was driving my insurance up by 200 euro to 685 and a nisssan leaf was 50 cheaper than the performance tesla.

TitianGerm

drunkmonkey wrote: »

So that would be another 3k saving for the company in the first year. You can only claim that the once I presume under the rules as it's all being claimed in the first year.

No, capital allowances on a regular car means you get 12.5% of the €24000 every year for 8 years.

The accelerated CA means you can claim the full €24000 as a capital allowances in year one.

Shefwedfan

OCD wrote: »

AFAIK, you can't claim mileage from a company and benefit from BIK unless the company doesn't pay all the other costs like insurance, fuel, tyres, etc.

Could be wrong though.

Not sure what you mean


I had a diesel company car with fuel card which meant I got VAT off the diesel. I paid for the rest of the cost of fuel. I then claimed mileage for any travel to customers etc....


The car, insurance, tax, service etc was all paid for.....

drunkmonkey

TitianGerm wrote: »

No, capital allowances on a regular car means you get 12.5% of the €24000 every year for 8 years.

The accelerated CA means you can claim the full €24000 as a capital allowances in year one.

Is it the same thing, instead of the 3k saving (24k/12.5%) in year one. The 3k would just be spread over the 8rs @ a tax saving of 375 a year.

TitianGerm

drunkmonkey wrote: »

Is it the same thing, instead of the 3k saving (24k/12.5%) in year one. The 3k would just be spread over the 8rs @ a tax saving of 375 a year.

No no. Capital allowances are given against company/sole trade profits to reduce taxable profit.

So if you buy a machine for 80000 you can claim 12.5% of that €80000 every year against your taxable profit. So you'd get €10000 capital allowances to reduce your taxable profit each year for eight years or for as long as you own that machine.

Accelerated capital allowances means you claim that €80000 in year one.

Same applies to business card but the max limit is €24000.

drunkmonkey

So I can reduce my tax bill by 24k in year one? I'm even afraid to ask you as I still think i'm wrong, I should really know all this. I wouldn't really have any big ticket capital expenditure at the moment.

TitianGerm

drunkmonkey wrote: »

So I can reduce my tax bill by 24k in year one? I'm even afraid to ask you as I still think i'm wrong, I should really know all this. I wouldn't really have any big ticket capital expenditure at the moment.

Not your tax bill but your taxable profit. So if your company (assuming LTD company) has made €100,000 taxable profit your capital allowances would reduce that to €76,000. Then if you'd no other deductions and you'd pay 12.5% on that €76,000.

Your accountant would be able to sit down with you and run through this in a lot more detail and how it'd play out in your situation.

drunkmonkey

That's what I thought it comes off the taxable profit, I asked the accountant last year but ended up just buying my own car again rather than run it through the company.
It's still 3k tax saving on the example of 100k vs 76k : ) 12.5k tax vs 9.5k

Think I have it all figured out now.

Cyrus

How can ownership be transferred from company to employee ? Do you have to sell it at market value ?

TitianGerm

Cyrus wrote: »

How can ownership be transferred from company to employee ? Do you have to sell it at market value ?

In general or for an EV?

Cyrus

Well specifically re an ev but perhaps it's the same

TitianGerm

Cyrus wrote: »

Well specifically re an ev but perhaps it's the same

Ok I'm not sure on an EV but for a normal car where the company sells the car to an employee.

If the car has a market value of €20,000 and they sell to the employee for €12,500 the employee will be liable to BIK on the €7,500 discount. Now with an EV I'm not sure if that BIK is chargeable seeing as an EV is exempt from BIK on the normal use of the vehicle.

The company would be liable to a capital allowance balancing charge if they sold the car to the employee for less than the Tax Written Down Value. They would need to use a formula to calculate that and is based on a few different factors.

If your a director of the company the discount would be great as a distribution for income tax.

Cyrus

TitianGerm wrote: »

Ok I'm not sure on an EV but for a normal car where the company sells the car to an employee.

If the car has a market value of €20,000 and they sell to the employee for €12,500 the employee will be liable to BIK on the €7,500 discount. Now with an EV I'm not sure if that BIK is chargeable seeing as an EV is exempt from BIK on the normal use of the vehicle.

The company would be liable to a capital allowance balancing charge if they sold the car to the employee for less than the Tax Written Down Value. They would need to use a formula to calculate that and is based on a few different factors.

If your a director of the company the discount would be great as a distribution for income tax.

It's the bik piece that's the key

I'm trying to figure out if it's possible to use a gross portion of a bonus to get an ev ,

Still not sure

drunkmonkey

There's probably a bit you can add to that question, i.e do you have to give back any of the accelerated capital allowance.
Vat wise you don't have to charge vat when selling it if you've had it over 2yrs from my reading of the rules.

TitianGerm

drunkmonkey wrote: »

There's probably a bit you can add to that question, i.e do you have to give back any of the accelerated capital allowance.
Vat wise you don't have to charge vat when selling it if you've had it over 2yrs from my reading of the rules.

If the company sells the car for more than the TWDV (cost less capital allowances claimed) then a balancing allowance will be payable by the company.

drunkmonkey

TitianGerm wrote: »

If the company sells the car for more than the TWDV (cost less capital allowances claimed) then a balancing allowance will be payable by the company.

and if you don't claim the capital allowance?

What I'm really asking is if I sell it to the Mrs for 5k in year 3 what happens?

TitianGerm

drunkmonkey wrote: »

and if you don't claim the capital allowance?

What I'm really asking is if I sell it to the Mrs for 5k in year 3 what happens?

Do you have a LTD company or do you operate as a sole trader? If it's a company is your wife a director?

drunkmonkey

TitianGerm wrote: »

Do you have a LTD company or do you operate as a sole trader? If it's a company is your wife a director?

I operate as both I've a sole trader and LTD. No wife has nothing to do with it she's paye. I've 100% holding of both.

TitianGerm

drunkmonkey wrote: »

I operate as both I've a sole trader and LTD. No wife has nothing to do with it she's paye. I've 100% holding of both.

Your wife will be treated as a connected person then. To be honest you'll be best to sit down with the accountant now at this stage and they should be able to come up with a plan to minimize your exposure to tax.

drunkmonkey

At arms length I know where that conversation is going, Maybe Cyrus can sell her his and he'll buy mine, it'll be like Tinder for EV's here yet.