Car vs Pickup as LTD company

[Kayos]

People using pickups as company cars are the reason there isn't any tax breaks on them any more

 

[knighty]

I think you will find that you are not allowed to take a pool car home, it must stay at work or other location if away from home , as soon as you take it home it becomes a benifit in kind.

these are the 5 HMRC 'rules' for a car to be a pool car... you have to satisfy all of them...

(a) the car was made available to, and actually used by, more than one of those employees,

(b) the car was made available, in the case of each of those employees, by reason of the employee’s employment,

(c) the car was not ordinarily used by one of those employees to the exclusion of the others,

(d) in the case of each of those employees, any private use of the car made by the employee was merely incidental to the employee’s other use of the car in that year, and

(e) the car was not normally kept overnight on or in the vicinity of any residential premises where any of the employees was residing, except while being kept overnight on premises occupied by the person making the car available to them.


there's a specific note that a pool car shouldn't be used for travel to/from work, unless it makes more sense to take a car home than to travel to pick it up before work

but.. I just googled it, there's plenty examples of people being sent tax bills for cars which have been used for travel to/from work, appealing against them and then winning, as long as you can show that it was not used for personal use

 

[JLP]

so running my LTD company having it registered as my home address could cause me a massive tax bill despite my office quite literally being 2' from where it would be parked? Its literally the other half of a double garage, car one side, work the other

 

[knighty]

when I googled it earlier, there was a miss match of information, some saying it's fine some saying it's not, some official stuff for hmrc saying it is, some saying it isn't, some people appealing their tax bill, some winning some not.

I guess like a lot of laws they have very strict parts and some kinda vague parts... which lets them interpret it as they see fit to apply it to different situations


but as above, if possible buy it yourself and pay yourself a millage allowance, 45p/mile tax free for first 10k miles (then 25p after)

tho I guess it depends what you want to buy and how many miles you do - lots of miles in something cheap works well in your favour, something expensive with low miles might not be so good

 

[Matrixx]

My LTD company is my home adress, i was told I could have a company vehicle but HMRC would not let you off the benifit inkind tax even if i recoreded every single mile I did for work.

 

[JLP]

when I googled it earlier, there was a miss match of information, some saying it's fine some saying it's not, some official stuff for hmrc saying it is, some saying it isn't, some people appealing their tax bill, some winning some not.

This is the issue I am finding with this.

but as above, if possible buy it yourself and pay yourself a millage allowance, 45p/mile tax free for first 10k miles (then 25p after)

This is my current approach and coming in at over £700 a month for the mileage I cant complain with the boost in salary as such. I cant imagine its any better me doing it through the company other than the fact I can do HP rather than PCP? I'm doing almost 19k miles a year so well over the PCP limits of 10k

 

[Matrixx]

if you can get away with a company car you can claim back the VAT, on fuel, servicing, etc, and if you buy new.

 

[JLP]

if you can get away with a company car you can claim back the VAT, on fuel, servicing, etc, and if you buy new.

so you cant if bought second hand from a dealership?

 

[knighty]

he means VAT on the car purchase

cars are weird for VAT... and tbh I don't know all the ins and outs... new cars have vat on them, sometimes 2nd hand cars have vat sometimes they don't, from a dealer sometimes the vat is on the whole car, sometimes it's only on a dealers profit margin

(I'm no expert on this tho, does not apply to me so haven't looked too deeply into it)

 

[JLP]

he means VAT on the car purchase

cars are weird for VAT... and tbh I don't know all the ins and outs... new cars have vat on them, sometimes 2nd hand cars have vat sometimes they don't, from a dealer sometimes the vat is on the whole car, sometimes it's only on a dealers profit margin

(I'm no expert on this tho, does not apply to me so haven't looked too deeply into it)

Now that sounds like a head f***

 

[Endeleus]

A few things to think of:

• If the payload is 1 tonne or over, it counts as a commercial vehicle rather than a car. For a double-cab pickup, it is only a commercial vehicle if it can take 1,000kg in the back after allowing for the weight of any accessories or canopies you have fitted
• Commercial vehicle insurance usually states cover is included for Social, Domestic and Pleasure use. This is nothing to do with tax status, simply a standard clause in the insurance.
• If you use the vehicle only for work and only for "insignificant" personal use, then there is no BIK liability. HMRC have guidance on what constitutes incidental use, such as stopping at a shop on your way home from work, or taking private things to the tip a few times a year. Taking the vehicle on holiday, or using it privately most evenings or weekends would incur Benefit in Kind tax.
• Be honest with HMRC (and yourself) on how the vehicle is used - paying the right amount of tax is better than an investigation, and for a van is less than you might think:

Current van rates for 2018 - 2019:

• Van tax charge: £3,350
• Van fuel benefit: £633

The company pays Class 1A NICs (currently 13.8%) on the rates above:
£462 (vehicle only) or £549.65 (company pays for private fuel)

and the employee pays tax at their applicable rate on the charge above, so the Benefit in kind tax would be:

Basic Rate Taxpayer (20% England, 21% Scotland)
England: £670 (vehicle only) or £796.60 (company pays for private fuel)
Scotland: £703.50 (vehicle only) or £836.43 (company pays for private fuel)

Higher Rate Taxpayer (40% England, 41% Scotland)
England: £1,340 (vehicle only) or £1,593.20 (company pays for private fuel)
Scotland: £1,373.50 (vehicle only) or £1,633.03 (company pays for private fuel)

Upper Rate Taxpayer (45% England, 46% Scotland)
England: £1,507.50 (vehicle only) or £1792.35 (company pays for private fuel)
Scotland: £1,541 (vehicle only) or £1,832.18 (company pays for private fuel)

So basically if you are a one-man limited company in England, basic rate taxpayer, and company pays for your fuel, the total tax liability is £1,346.25 for the year. At the top end of the scale, the top rate in Scotland is £2,381.83 - either way a van works our much cheaper than a company car.

If you only use the vehicle for business use, and use your own car privately, then there is no benefit in kind charge, regardless if whether or not it is parked in your driveway over the weekend (if you work from home).

I have no idea on the rules for a sole trader or self-employed.

 

[Endeleus]

My LTD company is my home adress, i was told I could have a company vehicle but HMRC would not let you off the benifit inkind tax even if i recoreded every single mile I did for work.

You should get a better advisor in that case. The rules are actually quite clear, if a little complex to calculate the liability (see post above).

"Employers and employees where employers provide employees with company vans available for private use, or provide fuel for private mileage in company cars and vans."

Of course, there's nothing stopping HMRC from doing a quick compliance check, or taking notes if they pay you a visit for any other reason, but they'll be more inclined to believe you don't use it for private use if your private car is also parked in the driveway.

 

[Endeleus]

The insurance on all our trucks,cars and vans on the fleetplan clearly state not for social ,domestic and pleasure use.

Must differ by insurer. Ours clearly states they include SDP event though they're only used for business. I'd have thought your policy would leave your company exposed if an employee had an incident whilst breaking company policy (e.g. nipped out to collect the kids in one of your vans)?

 

[Endeleus]

so running my LTD company having it registered as my home address could cause me a massive tax bill despite my office quite literally being 2' from where it would be parked? Its literally the other half of a double garage, car one side, work the other

Not if you don't use the vehicle for private use. Just keep decent mileage records and there's no problem. The only time there would be a problem with HMRC is if you aren't honest about the vehicle usage, or don't keep adequate records.

For example, I have a company van which clocks in around 40,000 miles for year, and isn't used privately, although it is parked on my driveway when not being used. I use a fuel card for the van, invoiced directly to the company, and keep a record of client sites visited.

I have other vehicles parked on the drive, with my daily driver clocking up around 10,000 private miles each year, which can easily be checked via age of the car and current mileage. Everyone in my household has their own car parked in the drive registered to the owner, so quite clear we all have our own private vehicles.

 

[8ob]

Must differ by insurer. Ours clearly states they include SDP event though they're only used for business. I'd have thought your policy would leave your company exposed if an employee had an incident whilst breaking company policy (e.g. nipped out to collect the kids in one of your vans)?

Ours are OK to be used to and from home to the workplace but not for any other use outside of the business, I know others have the same because local plod were recently having night-time purges and knicking drivers of Transits/ commercials used outside of business hours. No doubt sdp can be added but I would not pay the premium, it costs us a fortune now just to include under twenty fives and any drivers regardless of smut on their licenses so a price hike for sdp use is out of the question.

Bob

 

[JLP]

Not if you don't use the vehicle for private use. Just keep decent mileage records and there's no problem. The only time there would be a problem with HMRC is if you aren't honest about the vehicle usage, or don't keep adequate records.

For example, I have a company van which clocks in around 40,000 miles for year, and isn't used privately, although it is parked on my driveway when not being used. I use a fuel card for the van, invoiced directly to the company, and keep a record of client sites visited.

I have other vehicles parked on the drive, with my daily driver clocking up around 10,000 private miles each year, which can easily be checked via age of the car and current mileage. Everyone in my household has their own car parked in the drive registered to the owner, so quite clear we all have our own private vehicles.

So from your messages, as a person sole person in a LTD company it seems I’m better off being paid the mileage and getting private vehicle as it comes off as a tax break. Whereas through the company I am still paying the tax and for the vehicle at full price

 

[Matrixx]

If you only use the vehicle for business use, and use your own car privately, then there is no benefit in kind charge, regardless if whether or not it is parked in your driveway over the weekend (if you work from home).

I thought this too, but after a very long argument with my accountant, i reverted back to mailage calims