Company Car Question
#1
Company Car Question
2 scenarios for me & new company car on contract hire
1) In their name, they pay direct and I get taxed appropriately
2) In my name and I claim the entire cost as expenses.
With the #2 option, what is my potential tax liablility? Will that money be seen as taxable at 40% (what my rate is) because it is a payment? Also, can they claim the VAT element back?
Reason is that as a startup, although well funded etc, credit rating is non-existant!
Insurance wise, I'll be shed loads cheaper than a company policy!
1) In their name, they pay direct and I get taxed appropriately
2) In my name and I claim the entire cost as expenses.
With the #2 option, what is my potential tax liablility? Will that money be seen as taxable at 40% (what my rate is) because it is a payment? Also, can they claim the VAT element back?
Reason is that as a startup, although well funded etc, credit rating is non-existant!
Insurance wise, I'll be shed loads cheaper than a company policy!
#2
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A while since I've looked at this in detail, but here goes.....
"In my name and I claim the entire cost as expenses"
With the #2 option, what is my potential tax liablility?
1) You'll pay the lease Co & will be therefore out of pocket, (unless you then receive a car allowance which you'll obviously be taxed on in the form of additional income.)
2) You will then be reimbursed by you employer for business mileage on:
a) the IR approved rates (First 10k at 40p per mile & 25p thereafter)
or
b) Some other rate ,if it's higher that the 40p & 25p above, it's a Benefit in kind & therefore you'll be taxed, or if it's lower you can reclaim the difference (* your marginal rate) from the Inland Revenue once a year.
"Also, can they claim the VAT element back?"
It would have to invoiced to the Co & not you in order that they could reclaim, but I can't see how they could justify recovering the Vat on a employees car - it doesn't smell good does it ? It'd certainly be a BIK if it was recovered.
Broad brush statement without knowing your business / personal miles ..... go for a cash allowance if having a new car isn't important to you & a Co fuel card. (Your private fuel cost would then be the BIK * tax rate.)
D
"In my name and I claim the entire cost as expenses"
With the #2 option, what is my potential tax liablility?
1) You'll pay the lease Co & will be therefore out of pocket, (unless you then receive a car allowance which you'll obviously be taxed on in the form of additional income.)
2) You will then be reimbursed by you employer for business mileage on:
a) the IR approved rates (First 10k at 40p per mile & 25p thereafter)
or
b) Some other rate ,if it's higher that the 40p & 25p above, it's a Benefit in kind & therefore you'll be taxed, or if it's lower you can reclaim the difference (* your marginal rate) from the Inland Revenue once a year.
"Also, can they claim the VAT element back?"
It would have to invoiced to the Co & not you in order that they could reclaim, but I can't see how they could justify recovering the Vat on a employees car - it doesn't smell good does it ? It'd certainly be a BIK if it was recovered.
Broad brush statement without knowing your business / personal miles ..... go for a cash allowance if having a new car isn't important to you & a Co fuel card. (Your private fuel cost would then be the BIK * tax rate.)
D
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