private to company car?

private to company car?

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I want to sell my car to my company so that it becomes a company car for an employee - do I need to file a document with dvla and/or anything else other than notify hmrc

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By duncanedwards
21st Aug 2014 16:14

Well
It's a change of ownership and of registered keeper so I assume one or both need reporting to DVLA.

HMRC will need to know for car benefit purposes. Not sure about capital allowances.

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By johngroganjga
21st Aug 2014 16:25

DVLA need to be told about the change in registered keeper.  Ownership is nothing to do with them.

HMRC don't need to be told about the transfer of the car as such.  They will find out all about the company's acquisition of it when they get the company's next accounts.

HMRC need to be told when the company makes the car available for an employee's private use.  That's form P46(CAR) I think.

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By DMGbus
21st Aug 2014 18:34

Insurance; P46(car); Capital allowances

I would expect that the car insurers need to be informed and it is likely that a policy in the new owners name be put in place.

The necessary notification already correctly referred to above has a deadline of filing with HMRC of no later than 28 days after the end of a calendar tax quarter, as an example q/e 5 October 2014 file by something like 2nd November 2014.   This can be done online.    In practice I sometimes come across failures to file form P46(car) with HMRC yet haven't seen any penalties raised for this non-compliance.   Non-filing of P46(car) can cause accumulated unpaid tax liability / arrears for an employee, so not recommended from an employee-care viewpoint.

The car should be sold to the company at market value then the company claims capital allowances at 18% or 28% depending upon the CO2 emissions level (the 130g/km rule) on that value.

If there's outstanding finance on the car in a personal name then I can see problems arising and if applicable that's a further complication to address.

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By Carolynne
21st Aug 2014 20:17

Can I ask a question of everyone?

Is it not better to keep the car out of the company?

 

By claiming mileage allowance, you get this tax free (providing you claim the 45p per mile on the first £10,000 then 25p per mile thereafter).  You also then save 20% tax on the total expense through the P & L Account.

 

Is it also not easy to keep a track on being able to prove exactly how much mileage being done is personal and how much is being done through the business?

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Stepurhan
By stepurhan
22nd Aug 2014 08:51

Not for owner

The OP says that it is for use by another employee, not the owner. Since the owner providing the car would be a benefit in kind provided by a third party anyway, the normal arguments for keeping it out of the company would not seem to apply.

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By bajones
22nd Aug 2014 13:54

bit of a white elephant

A second hand car might be a bit of a white elephant to the employee as BiK will be based on list price not purchase price.  Check out the likely benefit in kind first, or the employee may not thank you when they get their notice of coding and discover how much tax they are paying on a second hand car!

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By nick farrow
22nd Aug 2014 16:48

many thanks for all your helpful comments - cost benefit analysis is actually quite complicated when you take into consideration all the factors for example VAT on repair costs, insurance, the fact that the employee is my wife marginal rate of personal tax etc. but I can deal with all that myself I just wanted to know the formal steps for the transfer in status

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Replying to tedbuck:
Stepurhan
By stepurhan
22nd Aug 2014 16:56

Casual additional fact

nick farrow wrote:
...the fact that the employee is my wife...
OK, forget what I said about the normal advice for keeping the car out of the company. This late arriving fact reinstates all those concerns. You really might want to reconsider this move.
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By andy.partridge
22nd Aug 2014 17:18

Check with your wife

She has a tax qualification, what's her view?

She might suggest that it will be disclosed on your P11D anyway.

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By nick farrow
25th Aug 2014 12:14

thanks again

to be honest I know all the tax pros & cons & compliance issues around company & private cars what I wasn't sure about was the correct formal mechanism for transferring a privately owned car to my limited company so as to make it a company car
 -ps I'm impressed Andy you knew my wife had just qualified as ATT!

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