Capital contribution on cars

Capital contribution on cars

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A director wants to make a capital contribution of up to £5,000 on the purchase of a new company car. Although this will reduce the list price of the car by £5,000 for BIK purposes, what happens when the car is sold. Will he get a proportion of his money back, and tax free?

Presumably, the £5,000 will aso reduce the cost of the asset in the accounts as well as for capital allowances by this amount. Is this correct? Does he need to enter into any formal agreement with the company?
JB

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By AnonymousUser
07th May 2008 17:19

The agreement should be
for the director to receive a proportion of the sale price (eg car sold for half its purchase price, director receives £2,500, tax free. (EIM23193).

Capital allowances can be claimed in full by the employer. (CAA 2001 s536).

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