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Company Car Advice To Company director owners

How do you approach this advice?

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Am I alone in thinking that Company car advice to owner directors is a minefield and getting worse?  Rules change regularly and the compounded options seem to make it impossible to cover all bases with just some of the things (incomplete list) to consider being:

  • VAT
  • BIK
  • CA's
  • Lease v hire v HP, Electric v hybrid v petrol/diesel
  • Company owned v director owned
  • Company profitability/losses
  • Alternative methods of director remuneration
  • Personal income tax rates
  • Commercial deals v personal deals
  • Balloon payment level
  • Lease term (years)
  • Fleet deals
  • Make and Model
  • CO2
  • Car v Van
  • Electric range

I always struggle to provide company car advice on the occasional times that I am asked and I always spend many hours to ensure that my knowledge is right up to date and that I have covered as many matters as I possibly can.  To the best of my belief I do a go job but always go over an acceptable budget and charge the client far less than the value of my time.  I think clients perceive the advice to be far easier to give than it actually is and this is reflected in my reluctance to charge very much for the advice.

Any template reply goes out of date and new rules are difficult to keep up to date with.  Ideally, I would outsource this advice but cannot find a suitable provider.  An up-to-date template or booklet would be great but I cannot find a suitable white label product.

How do you other accountants (qualified or unqualified) manage to deal with this type of advice when you only provide it on an occasional basis?

Replies (25)

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By ireallyshouldknowthisbut
03rd Aug 2020 14:15

I tell 'em to get a much nicer 2-3 year old car in their own name as it will work out much better value.

But if its electric its probably worth it, but only if they were about to spend £30-50k on a new car anyway, not because the shiny thing has a tax break.

The comps are always a pain to explain to the client and its often marginal or we wouldn't be doing 'em.

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Replying to ireallyshouldknowthisbut:
Hallerud at Easter
By DJKL
03rd Aug 2020 14:35

ireallyshouldknowthisbut wrote:

But if its electric its probably worth it, but only if they were about to spend £30-50k on a new car anyway, not because the shiny thing has a tax break.

Do good tax breaks stop you in a straight line?

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Replying to DJKL:
ALISK
By atleastisoundknowledgable...
03rd Aug 2020 16:26

DJKL wrote:

ireallyshouldknowthisbut wrote:

But if its electric its probably worth it, but only if they were about to spend £30-50k on a new car anyway, not because the shiny thing has a tax break.

Do good tax breaks stop you in a straight line?

No, but a dead battery will.

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Replying to ireallyshouldknowthisbut:
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By MC1
03rd Aug 2020 17:43

Hmm.. that's the problem, often marginal difference and/or non-financial factors (car colour, engine sound, etc) then over-ride the whole lot.

Glad to see you didn't say, "what you talkin' about, dead easy!"

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Ivor Windybottom
By Ivor Windybottom
03rd Aug 2020 15:02

At present I am inclined to say how difficult it is, but... an electric car with zero% BIK, and usually giving 100% relief for the company seems a good deal for now.

Otherwise get a van. Who wouldn't love a van. Just so handy for carrying stuff/people (obviously primarily loads, not people, by design).

Mostly clients can be encouraged to tell you what the choice is between, so that narrows down the consideration somewhat.

No hope of producing complete advice, given the tax rules and the unknowns.

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Replying to Ivor Windybottom:
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By MC1
03rd Aug 2020 17:45

Thanks, helpful answer and reassuring.

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Ivor Windybottom
By Ivor Windybottom
03rd Aug 2020 15:05

We'll all be cycling soon anyway if the clowns in the councils get their way!!

How cycle lanes will cure the pandemic is a mystery to my simple brain...

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Replying to Ivor Windybottom:
ALISK
By atleastisoundknowledgable...
03rd Aug 2020 16:29

The main road into Manchester City centre from the south is 2 lanes and can on a bad day be a 3 mile crawling queue. One if the 2 lanes has now been coned off for cyclists since May. Since then, I’ve seen 24 cyclists using it. Seems a fair split of the road, especially as they pay road tax ...

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Replying to atleastisoundknowledgable...:
By ireallyshouldknowthisbut
03rd Aug 2020 17:01

"especially as they pay road tax ..."

*sigh*

I pay road tax on two cars. I also cycle.

Virtually all cyclists also drive so your local councils decisions aside, poor argument against the evil cyclists, coming over here, not burning any fossil fuels, getting there quicker than you AND reducing their waistlines. Utter utter utter selfish so and so's

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Replying to ireallyshouldknowthisbut:
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By Gone Sailing
04th Aug 2020 12:30

shades of Stuart Lee

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Replying to ireallyshouldknowthisbut:
Hallerud at Easter
By DJKL
04th Aug 2020 13:09

A fair few could take a cycle safety test for a start; across the pavements, ignore the colour of the lights, drive up the inside on one's blindspot etc.

I have no issue with cycling per se but some of the idiots allowed to be in charge of a bicycle now need policed- number plates on bikes , cameras and fixed penalties is where we likely now need to head.

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Replying to DJKL:
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By bendybod
05th Aug 2020 10:40

But the government encouraged people to cycle at a time when they couldn't take a safety course if they wanted to due to social distancing!! I confess that I haven't ever taken one and now cycle regularly but given that I took a driving test 27 years ago and a motorcycle test 7 years ago, I feel that I am probably adequately au fait with the laws of the road - and riding a motorbike has taught me to expect more or less anything from every road user.
My bicycle is insured and my car and motorbike are taxed and insured. I'm sure when people see me on my bicycle they will still assume that I'm a lycra lout and decide that I should be paying RFL though.

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Replying to atleastisoundknowledgable...:
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By matthew pennifold
05th Aug 2020 11:52

Much better to sit in your car for a 3 mile crawl than join those pesky cyclists.

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ALISK
By atleastisoundknowledgable...
03rd Aug 2020 16:31

When asked I simply say “if it’s 100% electric, sure. If it’s not, dont”.

Job done. None of my clients have company cars. I don’t submit a single P11D.

Thanks (2)
Replying to atleastisoundknowledgable...:
ALISK
By atleastisoundknowledgable...
03rd Aug 2020 16:33

atleastisoundknowledgable... wrote:

. I don’t submit a single P11D.*

* Not entirely true, Mrs ALISK & I have P11Ds for health insurance.

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Replying to atleastisoundknowledgable...:
My photo
By Matrix
03rd Aug 2020 17:31

What about overdrawn DLAs and those who have put through personal tax return fees?

I answer company car queries in exactly the same way as you (and hope they won’t ask for a calculation).

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Replying to Matrix:
ALISK
By atleastisoundknowledgable...
05th Aug 2020 13:59

Personal tax returns are included 'free' on my ltd co engagement letters. Clients are aware of the reality & reason for that.
DLAs stay below the interest threshold . Normally. Somehow.

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Replying to Matrix:
ALISK
By atleastisoundknowledgable...
05th Aug 2020 13:59

Personal tax returns are included 'free' on my ltd co engagement letters. Clients are aware of the reality & reason for that.
DLAs stay below the interest threshold . Normally. Somehow.

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Replying to atleastisoundknowledgable...:
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By MC1
03rd Aug 2020 17:46

Quite similar here but clients still ask the question!

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Replying to atleastisoundknowledgable...:
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By bendybod
05th Aug 2020 10:42

Pretty much my line too. I have a client who bought a beautiful (OK, I'm a petrol head) Tesla for around £93k and have a tiny BIK. If I could afford a Tesla as a toy then I might do likewise.

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By Hut15
05th Aug 2020 11:26

I tell them straight away that there are so many variables that it's impossible to say exactly, but as a general rule of thumb it's not worth having a company car unless you are buying brand new and doing a lot of business miles with a biggish engine. Otherwise, buy the car yourself and claim mileage.

Then the new EV regime complicated that somewhat **rolls eyes**

To be helpful, I always add - let me know specific details when you have a better idea of what vehicle you want and I will be able to tell you the tax consequences. Most owner directors choose the vehicle they want and then need the most tax efficient way of handling that vehicle, rather than choosing a vehicle to fit a particular tax break. Basically, they need to narrow it down and then you can steer them away from the pitfalls (like believing everything the salesman told them about how they can claim all the VAT back).

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By Gone Sailing
05th Aug 2020 11:55

A better idea ...

Just send them a link to this wonderful thread.

Sorted.

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Replying to Gone Sailing:
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By MC1
05th Aug 2020 12:16

If only it was that easy! :)

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