Share this content

Electric car in a property/investment company?

Could the director of a property/investment company have an electric company car?

Didn't find your answer?

A client who has an investment/property company has asked if he can run an electric company car. (The company has substantial investments and a couple of rented properties which are a long way from the director's home. He's otherwise retired.)

My feeling is that he can't.

Tax relief against the property income is extremely dubious. There are only two properties and they are beyond electric car range, so a charge on-the-way each way would be needed. It's not going to happen!

If we didn't claim any tax relief on the expenditure but just reported the benefit in kind then HMRC could say, "you're admitting this isn't expenditure for a trade, the payments are just money drawn personally from the company and we'll calculate tax etc accordingly!"

Any thoughts?

Thanks.

Replies (3)

Please login or register to join the discussion.

avatar
By Paul Crowley
04th Jul 2022 14:23

In principle the deduction is allowable as being a benefit in kind on the director for the usual trading company. No need to do any business miles.
BIKs are just part of the employee remuneration scheme.
HMRC keep banging on that letting is a business.
Maybe this is the deciding factor to make company letting of residential property a really good decision, at least in the short term.

Thanks (3)
avatar
By More unearned luck
04th Jul 2022 14:53

Fortunately for your client an agent's feeling have no bearing on the matter.

I'm unware of any law that prevents a limited company that owns investments from also owning or leasing an electric motor car (to answer your headline question).

As Paul says the extent to which a car is used in the employer's business is neither here not there.

The car is a BIK. The cost of which is part of the director's remuneration package. The aggregate cost of which needs to be considered in order to answer the CT deduction question.

I doubt HMRC would say: "you're admitting this isn't expenditure for a trade, the payments are just money drawn personally from the company and we'll calculate tax etc accordingly!" because:

1. There is no trade.
2. Whether the company is meeting its own liabilities or is settling those of a director is a matter of fact. The main fact, in this case, being who owns or leases the car.
3. The claiming or not of a CT deduction is not a relevant fact.

Thanks (7)
avatar
By Corinius
05th Jul 2022 14:55

Many thanks for your helpful and analytical replies, clearly some woolly thinking going on here!

Thanks (0)
Share this content