Share this content

Second-hand company car

Second-hand company car

Didn't find your answer?

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,

Rob

Replies (9)

Please login or register to join the discussion.

avatar
By ACDWebb
10th Jan 2011 17:32

How are you calculating the BiK?

List price when new, or cost to the company? The former is the correct value not the latter

Thanks (0)
avatar
By charlesc
10th Jan 2011 17:46

BIK

Don't forget the BIK is based on the CO2 emmissions it might be more benifical for you on the BIK to organise a new car on lease than an old one. Drop me a mail if you want more info.

Thanks (0)
avatar
By Anonymous
10th Jan 2011 22:32

Costs

Thank you very much for your responses. A bit more research has shown that at 40% taxation I'll be paying 1700 for the NiC, and I think that the company would have to pay 12.8% on the P11D value of the car (at 24k) rather than the 8k purchase price.

I can't believe the Government have run out of money if they are taxing everyone like this!?

 

 

Thanks (0)
avatar
By neileg
11th Jan 2011 09:42

Deliberate policy

The BIK rules are deliberately skewed to favour new low emission cars. The idea is that this benefits the environment.

Thanks (0)
avatar
By Anonymous
11th Jan 2011 21:33

Thanks all for your responses - I think I'll just take the cash and buy a cheaper car. All seems like too much effort and not enough gain to organise a company car unless it's a new cat5 engine. 

Thanks (0)
avatar
By sanjchief
15th Jul 2019 21:06

Hi, I'm looking to buy a 2nd hand car. It's an electric car, and so its 2nd year BIK tax rate is zero.

As the car is greater than 1 year old, does that mean that I have no BIK tax to pay, or do I still have to pay the BIK rate of the first year.

Thanks in advance.

Thanks (0)
Replying to sanjchief:
By Paul D Utherone
16th Jul 2019 10:22

You'd do better opening a new question than reopening a thread from 8 1/2 years ago

Thanks (0)
Replying to Paul D Utherone:
avatar
By Tax Dragon
16th Jul 2019 11:02

Google, Bing, Ecosia, Dogpile or whoever brought the new poster to this thread (and, thus, to this site). But I agree: reviving the thread was pointless. The OP contained salary sacrifice elements which I doubt are relevant to the new poster (which shows s/he hasn't read it). Also, rules have changed since the thread started (so it would have been no use even if s/he had read it).

If you're running a company, though (as mention of BIKs suggests), you should have an accountant. Questions like this should be addressed to the accountant, not asked in here (as new threads or otherwise).

Thanks (0)
Replying to sanjchief:
avatar
By Vile Nortin Naipaan
16th Jul 2019 10:58

I miss my gran. Any chance you could dig her up too?

Thanks (1)
Share this content