Buying As A Private Owner Or Through My Limited Company?

[jetskidia]

As I'm a member on here I have made the post below for my son, can anyone help please?

Buying as a private owner or through my limited company?

Hi

I have an i3 coming in a couple of weeks and I'm still not totally clear on which way to finance the i3.

I have a LTD company so plan to use the benefits that brings with it regarding cars in the UK

The two options, as stated in the subject, are:-

1. Buy privately and claim 45p a mile (for first 10000 miles, which I hope I don't exceed as that's my milage limit with BMW anyway)

Or

2. Buy through the company and claim money back through money off corporation tax payments.

I tried speaking to BMW but they don't seem to know which would be most tax efficient, I wonder if I can pick some brains of people to get some insight of which way to go?

Thanks

Chris

[Exdee]

Buying through the company has the following benefits:

- The finance charges and repair/maintenance you pay will be deductible for corporation tax purposes.

- If you are VAT registered (standard scheme) then you can usually claim back 50% VAT on the your monthly payments. You can claim the VAT on repairs and maintenance. Instead of 45p/mile you will claim back fuel scale charges based on your business mileage. You can claim VAT on this too.

Drawback is:

- You need to pay tax on the benefit you are receiving from the company (p11d). This is based on the list price (even for used cars) and emissions of the car. If the i3 has zero emissions then this will be zero for the current tax year, going up to 13% from next year. If for example, the list price of the I3 is 40,000 and your son is currently within the 20% tax bracket for income then his p11d benefit tax for next year will be as follows:

40,000 * 0.13 = 5200 * 0.20 = £1,040

By owning the car personally you can:

- Make use of the generous 45p per mile allowance. If you do 10,000 business miles at this rate then you can save about 900 in corporation tax.

- VAT on repairs can still be claimed as long as there is some business use and the business pays for the repairs. Just to be clear you can not claim the repairs and maintenance, Just the VAT. The repairs will go to the Director Loan Account.