[LS1990]

Hey guys,

Long time lurker here on the forums, still looking to get into a 435i.

I have a question regarding 'personal' leasing following a few phone calls with different companies. Basically they told me I couldn't take out a personal lease because I don't use my car for business purposes i.e. mileage for a business nor am I a director of a company, nor do I receive company car allowance.

Rhetorical question but, what's the point of calling it personal leasing and quoting prices inc VAT when it does not appear to be 'personal' at all?

Appreciate any comments.

[teaston]

I think the lease deal i got was one of these, as i had to prove i'm self employed. Not sure how, but they are able to get the price down a bit.

Difference between this and a "Business" lease i think is that in a Business lease the car is registered to a Ltd company, not an individual, and there's not VAT on a Business lease because the person using the car pays BIK tax on it instead.

[MWA]

Originally Posted by teaston

I think the lease deal i got was one of these, as i had to prove i'm self employed. Not sure how, but they are able to get the price down a bit.

Difference between this and a "Business" lease i think is that in a Business lease the car is registered to a Ltd company, not an individual, and there's not VAT on a Business lease because the person using the car pays BIK tax on it instead.

A company is entitled to claim back 50% off the VAT not all + whatever the company spends on the lease, is classified as expenses not profit and thus the company pays no captain gains tax on it

[335dMSport+]

Originally Posted by MWA

A company is entitled to claim back 50% off the VAT not all + whatever the company spends on the lease, is classified as expenses not profit and thus the company pays no captain gains tax on it

Aye aye Captain Gains!

[BMWSKI]

So how do people workout what's the best between the two? I have my own business (Company Director) but always get my cars through a personal PCP. I then charge back whatever mileage I do to my company. I am led to believe that because I claim mileage I am therefore not entitled to claim for monthly amount, insurance, servicing etc. Is this correct and am I doing the right thing by having a 'personal' deal???
TIA

[jayakrishnanv]

Yes if you are having the HMRC mileage rate(45p for initial 10K pa and 25p for any miles above that then you cannot claim for the service or insurance on top.

If its a business lease then all those expenses will be going from your company as the expense and as mentioned above vehicle is registered in the name of your business and is insured for business use with a personal mileage allowance of say 2k miles per annum or so.

In that case if am correct you will be able to claim only a low rate for mileage of something like 13p per mile.

You can find more details of the exact mileage rate per engine capacity here.
https://www.gov.uk/government/public.../current-rates

Now for the VAT claims yes you can claim back the VAT provided you are NOT in a flat rate VAT scheme. Flat rate VAT scheme is the one which has the limitation of your invoice value to be less than or equal to £150K a year. In order to have that VAT claimed back If you are doing a PCH then you will need to apply through your accountant to get the company moved out of the flat rate VAT scheme.
You need to really compare which is better. The reason being with flat rate VAT scheme though you invoice your client for 20% the agreed flat rate to be paid back to HMRC might be only 13 or 14 % depending on the nature of your company's business. Take that amount of 6-7% a year as well into your company which goes as corporation tax.

[teaston]

Originally Posted by jayakrishnanv

Yes if you are having the HMRC mileage rate(45p for initial 10K pa and 25p for any miles above that then you cannot claim for the service or insurance on top.

If its a business lease then all those expenses will be going from your company as the expense and as mentioned above vehicle is registered in the name of your business and is insured for business use with a personal mileage allowance of say 2k miles per annum or so.

In that case if am correct you will be able to claim only a low rate for mileage of something like 13p per mile.

You can find more details of the exact mileage rate per engine capacity here.
https://www.gov.uk/government/public.../current-rates

Now for the VAT claims yes you can claim back the VAT provided you are NOT in a flat rate VAT scheme. Flat rate VAT scheme is the one which has the limitation of your invoice value to be less than or equal to £150K a year. In order to have that VAT claimed back If you are doing a PCH then you will need to apply through your accountant to get the company moved out of the flat rate VAT scheme.
You need to really compare which is better. The reason being with flat rate VAT scheme though you invoice your client for 20% the agreed flat rate to be paid back to HMRC might be only 13 or 14 % depending on the nature of your company's business. Take that amount of 6-7% a year as well into your company which goes as corporation tax.

So where does BIK come into it? Or doesn't it?

[jayakrishnanv]

Originally Posted by teaston

So where does BIK come into it? Or doesn't it?

Yes BIK comes into picture for the company car. In that case how the BIK is calculated is based on the CO2 emission and HMRC % of tax based on emission values. Say a car has a P11D value £30K. In that case the car benefit % is calculated @19% will give it as £5700.

Now that £5700 is your benefit in kind as a cash equivalent value a year and is also assumed as a employee benefit on top of your salary. So depending on your tax bracket say 20% or 40% or 45% you will have the tax calculated. In this case assume our tax % to be at 20% which will make your annual benefit in kind and its tax working out to £1140.

Assume your annual salary before tax to be £42000. In this case as per the new rule upto initial £10K you will not be taxed and anything above that will be. Now if you have opted for the company car then since you have the company car benefit in kind tax also there your tax rebate limit will come down £10000 to £8860. So anything above £8860 will be taxed @20%

Sorry its a bit complex tried to explain the maximum how i know.

[jayakrishnanv]

Adding to the above sometimes company car option(even taking it as business lease through your own company) will be cheaper than taking the mileage charges and doing a PCP