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Greg

We are pleased to introduce Greg Smyth from Smyth & Co. Chartered Accountants as our guest contributor for this post:

As a Chartered Accountant, a common question I am asked is “Should I buy the car personally or through my company?”

The vehicle you choose makes a difference; CO2 emissions have a huge impact.

 

With this and so many other factors impacting upon the calculations it is not a straight forward question to answer. However, below I set out some points to consider:

– Where a car is made available to an employee by reason of employment, the income tax charge is based on a percentage of the car’s list price, graduated according to the level of the car’s CO2 emissions measured in grams per kilometre (g/km). Therefore, the lower the CO2 emissions rating the more likely it is that you will benefit from buying the car through the company.

– Because the benefit in kind is also based on the list price, buying a second hand car at considerably less than list price is unlikely to be tax efficient as a company car.

– In terms of capital allowances, from 1 April 2013 you should ensure the CO2 emissions are no greater than 130g/km to obtain an 18% writing down allowance. If the CO2 emissions are above this then you will only receive an 8% writing down allowance.

– If you can manage with a small car, then look for something that outputs no more than 110g/km to obtain 100% capital allowances.

Many other areas such as tax rates, mileage, running costs and how you intend to finance the purchase need to be taken into consideration. Ask an accountant to complete the calculations for you – it can be costly to make the wrong decision.

Greg Smyth – Smyth & Co Chartered Accountants

 

The information contained in this article is written as a general guide and is not a substitute for professional advice.  You are strongly recommended to obtain specific advice before you take any action.  No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this article can be accepted by Smyth & Co.

 

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