{"id":767,"date":"2022-05-16T13:47:44","date_gmt":"2022-05-16T13:47:44","guid":{"rendered":"http:\/\/woocommerce-1071917-3751140.cloudwaysapps.com\/?p=767"},"modified":"2022-05-16T13:47:44","modified_gmt":"2022-05-16T13:47:44","slug":"personal-vehicle-or-company-car","status":"publish","type":"post","link":"https:\/\/taxtribe.co.uk\/personal-vehicle-or-company-car\/","title":{"rendered":"Personal Vehicle or Company Car?"},"content":{"rendered":"

If you\u2019re a business owner, a reliable vehicle is often a necessity. And having the newest model makes a good impression on clients, too. But should you buy or lease a car for yourself, or through your company?<\/span><\/p>\n

At first sight, the benefits of a company car \u2013 writing off the purchase\/lease, repair and fuel costs against tax, <\/span>reclaiming VAT<\/span><\/a> \u2013 do look very attractive. However, the reality is a lot more complex. Here are just a few of the questions you should ask when making this decision.<\/span><\/p>\n

Do I really need a new car?<\/b><\/p>\n

If you\u2019re reading this article, you probably want a new car. But that\u2019s not the same as needing it. A new car is a big investment, and it\u2019s only worth making if it will offer concrete benefits for your business: for example, if your current car is unreliable, or you can\u2019t use it as much as you want to for family reasons. The potential tax benefits are simply not big enough to be a factor in this decision.<\/span><\/p>\n

If you\u2019re sure that you need a new car in order to run your business effectively, it\u2019s time for the next question.<\/span><\/p>\n

Is this car purely for business use?<\/b><\/p>\n

The key term here is \u201cBenefit in Kind\u201d. A company vehicle is defined as a benefit in kind if owning it benefits you personally; if it\u2019s a \u201cperk of the job\u201d. So if you buy or lease a new BMW and use it to commute to work and run errands, you\u2019ll pay Benefit in Kind Tax (BIK) for the privilege.<\/span><\/p>\n

BIK is calculated on the basis of your vehicle\u2019s CO2 emissions. For a fully electric car, it\u2019s 1% of the list\/lease price, rising to 2% from 2022. Hybrid and petrol\/diesel cars are more expensive. Emissions levels also affect how much of the car\u2019s cost your company can reclaim against tax.<\/span><\/p>\n

If the car runs entirely or partly on fuel paid for by the company, and you also benefit from the use of that fuel, there will be BIK to pay there, too. The deemed cash benefit will also be subject to Class 1A National Insurance. The only way to avoid these extra tax burdens is never to use your car for any personal reason, ever. And how feasible is that?<\/span><\/p>\n

Do I actually need a car? Or do I need a van?<\/b><\/p>\n

This is a very important question, because commercial vehicles are taxed differently. If the vehicle you want is actually classified as a van \u2013 and it\u2019s important to check this before going ahead, because appearances can be deceptive \u2013 then it\u2019s <\/span>subject to a simpler and more favourable tax regime.<\/span><\/a> This can be a good option if a van would suit your needs.<\/span><\/p>\n

If it absolutely has to be a car, then you have some decisions to make. The best way to head off unwanted costs is to speak to a tax advisor before taking any action. If you are thinking about buying or leasing a company car, we\u2019re happy to help you figure it out. Just <\/span>get in touch<\/span><\/a> for a free, bespoke quotation.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

If you\u2019re a business owner, a reliable vehicle is often a necessity. And having the newest model makes a good impression on clients, too. But should you buy or lease a car for yourself, or through your company? At first sight, the benefits of a company car \u2013 writing off the purchase\/lease, repair and fuel…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-767","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/767"}],"collection":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/comments?post=767"}],"version-history":[{"count":2,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/767\/revisions"}],"predecessor-version":[{"id":769,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/posts\/767\/revisions\/769"}],"wp:attachment":[{"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/media?parent=767"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/categories?post=767"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taxtribe.co.uk\/wp-json\/wp\/v2\/tags?post=767"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}