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Company Cars

Company Cars

Hello

Please some help on Company cars which seem to be a thing of the past has more and more employees choose to take the money.

Anyhow small limited company the owner wants to buy his employee a company car to do his job working for him.

What would you suggest the best and tax efficent way and why.

1) Out right Purchase.

2) Finance

3) leasing

I suppose the last way is just a cost to the P&L for renting the car? rather than buying out right and then depreciation etc.

The employee will need to pay tax on the benefit.

Anyhow the best and simplest way for accounting and tax please.

Thank you

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20th Sep 2012 17:19

Don't do it

Just pay mileage

Unless you are running an exceptionally expensive car with very high private mileage it is just not worth it.

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By ABPS
21st Sep 2012 13:58

Thanks Chris

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By Exector
21st Sep 2012 14:38

Possibility of a van or pool car?

As said.

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21st Sep 2012 15:04

I would generally agree

Generally I would agree with the previous postings that providing a car for an employee is an expensive option. However to answer your question:

Aside from cash flow and cash discounting issues the differences in the tax consequences of the different types of purchase/hire aren't enough to be the driving (excuse the pun) factor. I and my colleagues have made these calculations time after time and come to the same conclusion:

choose the best financial deal and the the tax consequences will take care of themselves.

Alternative

Where your client's employee covers a lot of business miles then he might consider an employee car ownership scheme (ECOS) or similar. Broadly this is a scheme where the employer arranges and perhaps guarantees a loan for an employee, which is repaid using their mileage allowance claims. The effect usually is that to the employee it seems like a company car but without the same tax consequences. The employer can create their own scheme, or they can go to one of the many companies that market these. Do a search on the net.

TC

Tips and Advice Tax 

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By ABPS
23rd Sep 2012 09:18

Thanks Tony for your comments

 

Kind Regards

 

Mark

ABPS

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By katezoe
12th Oct 2012 06:29

 

 

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