Own Company - Company Car & Tax Query

AlanD

Hi all,

I have my own limited company for a piece of work I do and am wondering if I would be able to buy a car through this company and claim any VAT back off the purchase price?

Could I also make any claims for the tax, insurance and fuel spent on the car?

Would the car have to be used for business use only? I assume that I'd have to pay BIK for it.

But what really are the benefits of using your company to buy a car for personal/business use?

Regards,

ds20prefecture

AlanD wrote:

Hi all,

I have my own limited company for a piece of work I do and am wondering if I would be able to buy a car through this company and claim any VAT back off the purchase price?

Could I also make any claims for the tax, insurance and fuel spent on the car?

Would the car have to be used for business use only? I assume that I'd have to pay BIK for it.

But what really are the benefits of using your company to buy a car for personal/business use?

Regards,

I don't know about the VAT, but I don't think you're able to claim it back on a new car, and obviously not on a second hand one.

You can put the purchase price and all expenses regardless of use through the company if you pay the BIK, which is taxed as additional income of 33% of the new car price. This works very well if you buy a very old car through your company, as the new car price in, say, 1972 might be about €5000 - income of €1666 = about €700 in extra tax paid per year. Note that the company can pay as much as you want for the car, it's the new car price that counts.
So if you buy yourself a 10 y.o. BMW that cost 50,000 when new you're paying €7000 in BIK per annum, even if the car only cost you €10000 to buy.

You can claim also VAT back on all expenses for the car (petrol, servicing, parts, "enhancements", etc.)

Alternatively, if you can show the mileage is for company use, you can pay yourself a tax-free mileage allowance of about €1 per mile for the first 5000 and €0.64 per mile thereafter (I think these are correct - it was 2003 when I last did this). You should keep a mileage diary in case of inspection.

ds20prefecture

AlanD wrote:

But what really are the benefits of using your company to buy a car for personal/business use?

1 other thing. Your company will depreciate the value of the car off the books over a period of time (say 3 years). The company can then sell the car to a director for a nominal amount.

So the company spends €90,000 on a pristine 1969 e-type jaguar (cost new equivalent to about €5000). you pay €700 per year BIK and all expenses are paid by the company (i.e. ex-income tax and ex-VAT). You depreciate the car over 5 years (3 would be a bit cheeky). The company sells the car to yourself for €30,000, and you now have a €90,000 e-type.

Contrast this to :
The company spends 90,000 on a new S-Class Merc. you pay €13000 per year BIK and all expenses are paid by the company. You again depreciate over 5 years and sell to yourself for €30,000. You now a 5 y.o. Merc S-Class - worth say €40000?

That's the theory anyway.

bazz26

To claim the VAT back you need to have a VAT number registered in your company's name.

SouperComputer

if buying new, you can only claim back VAT, not VRT which accounts for a fair whack of the price.

you can claim VAT back on a used car, provided you bought it from a VAT registered company. Simply because that way you have paid VAT. There are guidelines for VAT relief on used goods bought privatly, but I think it only counts agains goods for resale. Worth looking into.

halkar

You can not claim VAT on a car unless if it is a car-van, van or one of those jeeps with back windows tinted or those pick up trucks I think, check the revenue site, it explanes there.