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
Replies (10)
Please login or register to join the discussion.
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.
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.
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.
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?
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.
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!
Casual additional fact
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. ...the fact that the employee is my wife...
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.