I am a director in a company, and rather than taking a bonus of 10k (and taking the hit in NIC & tax), I am considering taking a car instead (registered to the company) and paying BIK.
I think it could work like this:
- Company buys 8k used car, registered to itself
- Company pays 12.8% NIC, taking total to approx 9k, and pays insurance - altogether totalling 10k
- Employee (me) pays BIK tax based on P11D value of the car - calculated at about 1k per year, for 3 years
- After three years (company pay for tax and maintenance in this period), the car would be worth about 4k and so they can write off the car from the books and transfer ownership to me
The cost of owning the car personally would be in excess of 1k per year anyway (depreciation, maintenance, insurance), so paying the BiK is ok by me.
I know very little about tax liabilities so I have pieced together an 'ideal situ' here - can anyone tell me if I've missed anything?
Thanks so much,