A client wants to get a new vehicle and has asked me the most tax efficient method and type of vehicle. He is the sole director and shareholder of a marketing business. He has asked if getting a van/pick up truck would be more efficient (suspect not as it's still hard to justify why a marketing company needs a van?), and whether lease / contract hire would be his best option. The company is VAT registered but on a flat rate scheme currently (though they may move back to standard VAT soon). Unfortunately I am snowed under with compliance work deadlines and don't have time to research this at the moment. Any guidance from anyone please? Has the tax regime made it absolutely not worth getting a company vehicle at all, or are there still ways of doing so efficiently? Many thanks.
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Yes that's the obvious answer if client's priority is really tax efficiency (but is it really?).
Do you not come across this question quite frequently?
As with most questions, there are so many imponderables and relevant facts for the individual.
And the answer is... (or isn't)...
In all honesty... isn't it what the client "wants" that is the issue?! For example...
- If the client has set his sights on a luxury diesel engine 4x4 (e.g. Range Rover Evoque), there is little point in us suggesting a BMW i3 electric car.
- Similarly, if the client is only willing to pay £10K for a new car, it is pointless suggesting an i3 as the list price is around £34K
In all honesty, I tend to go the other way around; find out what a client would like and then do a quick search for "like" vehicles.
There is no "correct" answer to this one as there are too many variables. A low emissions car may seem the best option but generally, the lower the emissions, the higher the list price so it's swings and roundabouts!
Have a look at Comcar if you want a good starting point or, better still, ask your client to look on Comcar. Whilst you clearly wish to do the best for your client, you're an accountant not a car salesman/ Parkers/ Glass's/ Autotrader etc.! There are plenty of websites giving advice that may be of help to your client.
I had a look at a 100% electric car recently (not a hybrid) and it is just not worth putting through the company. One of the problems is BIK on the car in coming years and if a personal acquisition mileage allowance does not apply to electricity (it is not considered a fuel by HMRC!).
Still searching for a clever scheme but struggling. Suspect the best answer for complete tax deduction is a taxi.
If your client wants to avoid a benefit charge because of limited private use, a heavy goods vehicle might be the way to go:
http://www.hmrc.gov.uk/manuals/eimanual/EIM22990.htm
CPC!
If your client wants to avoid a benefit charge because of limited private use, a heavy goods vehicle might be the way to go:
http://www.hmrc.gov.uk/manuals/eimanual/EIM22990.htm
Assuming the client has a CPC licence...!
CPC
I think that a few querists on here might be have trouble obtainin a CPC, and not in the context of HGV operations either!
Got one
I think that a few querists on here might be have trouble obtainin a CPC, and not in the context of HGV operations either!
I've got one of those, as it happens - but for coaches.
By tax efficient vehicle I thought you meant SPV so got confused when you started talking about transport. I thought it was a tax structuring question.
Why
Do you think the company would have to justify purchasing a van?
They can buy whatever they like as a benefit for the directors as long as the benefit is taxed accordingly!