UK GTS ST order Feb: heard from dealer, and...

[Midlifecrisis]

As long as your dividends don’t take you into a higher tax bracket. I don’t know if that is possible or how it would work.

I wonder if this is a first… the forum saving someone money!

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[TaycanHero]

As long as your dividends don’t take you into a higher tax bracket. I don’t know if that is possible or how it would work.

I wonder if this is a first… the forum saving someone money!

This is one of those obscene examples of where taxation is overly complicated. My director salary is bare minimum, the remainder of my income is divis that are taxed differently to PAYE.

Hence, I have no idea if company car BIK is paid at 20% or 40%. Quite sure it is the latter.

Time to ask the accountant...

 

[im85288]

This is one of those obscene examples of where taxation is overly complicated. My director salary is bare minimum, the remainder of my income is divis that are taxed differently to PAYE.

Hence, I have no idea if company car BIK is paid at 20% or 40%. Quite sure it is the latter.

Time to ask the accountant...

Exactly the same situation I am in and have had my EV via my limited company for the last three years (BIK was 0% at one stage!)

My understanding is that it depends how much dividends your taking as to weather you hit the 40% mark. If you do then the BIK will be applied at that rate…so it basically comes down to what personal tax bracket your putting yourself into.

 

[Midlifecrisis]

It's a mess, but either way it is less tax than you originally thought. So take the positive!

 

[TaycanHero]

Exactly the same situation I am in and have had my EV via my limited company for the last three years (BIK was 0% at one stage!)

My understanding is that it depends how much dividends your taking as to weather you hit the 40% mark. If you do then the BIK will be applied at that rate…so it basically comes down to what personal tax bracket your putting yourself into.

I now have an answer from my accountant.

Because my (our) salary is the bare minimum - and the remainder of income is paid in divis - tax payable on the benefit is 20%.

However, that means you must reduce your divis by the entire taxable benefit amount or that portion of your divis will be pushed into higher rate tax.

So let's assume I did want an ICE company (sports) car as one final homage before a lifetime of EVs - and it costs £45k - then:

• Car benefit charge 22/23: £12,726
• Tax Liability: 20%
• Company Car Tax 22/23: £2,545.20
• Car availability: 01/07/22 - 05/04/23
• Engine capacity: 2001cc or higher
• Approved CO2 emissions: 249

Here is where it gets revolting: using the above scenario, I would have to reduce my divis by £12,726 or that portion would be taxable at 32.5% = £4,135.95.

TOTAL TAX: £6,681.15

Meanwhile, on a £125k optioned Taycan GTS ST (car availability: 01/07/22 - 05/04/23):

• Divis will need to be reduced by £1,910 to avoid paying 32.5% tax.
• Company car tax = £382

But for comparison, let's apply the 32.5% to that £1,910:

TOTAL TAX: £1,002.75

This is why I would consider selling my Taycan if BIK increases to my prophesied 5% by April 2025.

It would mean reducing divis by £6,250 (use of car for full 12 months of tax year) or otherwise paying 32.5% tax on that = £2031.25 vs £468.75 @ 7.5%, in addition to 20% company car tax = £1,250.

Not enormous, but enough to seriously question the merits of owning such a high price car via a company. You can do a lot with £3,250 odd quid.

 

[Gavgolf]

It’s about time the Government made self employed people pay proper income tax rather than corporation tax on the ‘dividends’

 

[im85288]

I now have an answer from my accountant.

Because my (our) salary is the bare minimum - and the remainder of income is paid in divis - tax payable on the benefit is 20%.

However, that means you must reduce your divis by the entire taxable benefit amount or that portion of your divis will be pushed into higher rate tax.

So let's assume I did want an ICE company (sports) car as one final homage before a lifetime of EVs - and it costs £45k - then:

• Car benefit charge 22/23: £12,726
• Tax Liability: 20%
• Company Car Tax 22/23: £2,545.20
• Car availability: 01/07/22 - 05/04/23
• Engine capacity: 2001cc or higher
• Approved CO2 emissions: 249

Here is where it gets revolting: using the above scenario, I would have to reduce my divis by £12,726 or that portion would be taxable at 32.5% = £4,135.95.

TOTAL TAX: £6,681.15

Meanwhile, on a £125k optioned Taycan GTS ST (car availability: 01/07/22 - 05/04/23):

• Divis will need to be reduced by £1,910 to avoid paying 32.5% tax.
• Company car tax = £382

But for comparison, let's apply the 32.5% to that £1,910:

TOTAL TAX: £1,002.75

This is why I would consider selling my Taycan if BIK increases to my prophesied 5% by April 2025.

It would mean reducing divis by £6,250 (use of car for full 12 months of tax year) or otherwise paying 32.5% tax on that = £2031.25 vs £468.75 @ 7.5%, in addition to 20% company car tax = £1,250.

Not enormous, but enough to seriously question the merits of owning such a high price car via a company. You can do a lot with £3,250 odd quid.

I think we align here on trying to capitalise on the amazing BIK rates currently on offer. When it was 0% the other year it almost felt like something must be wrong as having gone from having a BMW at 37.5% BIK and paying crazy amounts to paying nothing I was like a kid in a sweet shop!

My plans are slightly different to yours though in that I’ve decided to purchase the Taycan privately but will keep my Tesla M3P via my limited company for a bit whilst BIK remains low and use that vehicle for putting any long distance miles on. The Taycan will be my fun car which I’ll keep long term.

 

[TaycanHero]

It’s about time the Government made self employed people pay proper income tax rather than corporation tax on the ‘dividends’

Income tax didn't exist before 1913 and it was bought in under the guise of funding a pretty big war... then never rescinded.

Ltd co SE pay 19% corp tax. On company paid income, they pay nothing up to £12,570 then 7.5% on the dividends up to £50,270. Dividends paid beyond that attract 32.5% and there is a higher rate beyond that as well.

Your suggestion would see SE paying 1p in the pound more. And as of next tax year, they would actually make a tax saving than pay the increases in corp tax!

As of next tax year, I quite like your idea.

Ultimately, taxation is utterly flawed. A system thousands of years old that has no place in a digitised economic system that is going galactic when the space race takes off latter half this century.

They should have a flat 10% tax on everything. It would be so simple and actually see MORE money flow into the economy, pay packets and altruistic deeds.

High taxation has denied this country serious £££ spending from me as one example. That cash is festering in my business bank account like a constipated golden turd. That scenario is mirrored across hundreds of thousands of people in the UK alone. High taxation is moronic.

 

[TaycanHero]

I think we align here on trying to capitalise on the amazing BIK rates currently on offer. When it was 0% the other year it almost felt like something must be wrong as having gone from having a BMW at 37.5% BIK and paying crazy amounts to paying nothing I was like a kid in a sweet shop!

My plans are slightly different to yours though in that I’ve decided to purchase the Taycan privately but will keep my Tesla M3P via my limited company for a bit whilst BIK remains low and use that vehicle for putting any long distance miles on. The Taycan will be my fun car which I’ll keep long term.

For ICE, buying personal makes a lot more sense.

And if you have the funds, then a Taycan could also make sense. Though for me, it makes more sense to buy it using company cash and then take a very small hit on personal finances with the very low BIK.

However, I did have one idea regarding that ICE sportscar I want to buy, to tide me over until my Taycan delivery: director loan.

I asked my accountant and he explained it's viable.

That is, I loan myself the entire funds for the sports car (about £45k second hand). Slap on the circa 2% minimum interest rate to avoid BIK. Buy the car as a "personal" item, meaning no company car tax or BIK. Then on the expectation my Taycan is delivered in <9 months, I sell the car in less than 9 months. Pay back the director loan, keep the books happy with the 9 month rule and then make up the est. 10% depreciation shortfall with my personal funds.

That way I can have the wonderful ICE sportscar I want - which will be the first and last I will own - then spend the rest of my life driving EVs, with the Taycan the first I would have owned.

Quite a bit of financial musical chairs, but the rules and timings of my situation seem to align quite nicely. The only thing is, I am quite sure I won't be in the UK for most of winter, so not sure if this is a sensible idea as much as I want the (ICE) car. I will really only be driving it through this summer, though it is a convertible

 

[Midlifecrisis]

I now have an answer from my accountant.

Because my (our) salary is the bare minimum - and the remainder of income is paid in divis - tax payable on the benefit is 20%.

However, that means you must reduce your divis by the entire taxable benefit amount or that portion of your divis will be pushed into higher rate tax.

So let's assume I did want an ICE company (sports) car as one final homage before a lifetime of EVs - and it costs £45k - then:

• Car benefit charge 22/23: £12,726
• Tax Liability: 20%
• Company Car Tax 22/23: £2,545.20
• Car availability: 01/07/22 - 05/04/23
• Engine capacity: 2001cc or higher
• Approved CO2 emissions: 249

Here is where it gets revolting: using the above scenario, I would have to reduce my divis by £12,726 or that portion would be taxable at 32.5% = £4,135.95.

TOTAL TAX: £6,681.15

Meanwhile, on a £125k optioned Taycan GTS ST (car availability: 01/07/22 - 05/04/23):

• Divis will need to be reduced by £1,910 to avoid paying 32.5% tax.
• Company car tax = £382

But for comparison, let's apply the 32.5% to that £1,910:

TOTAL TAX: £1,002.75

This is why I would consider selling my Taycan if BIK increases to my prophesied 5% by April 2025.

It would mean reducing divis by £6,250 (use of car for full 12 months of tax year) or otherwise paying 32.5% tax on that = £2031.25 vs £468.75 @ 7.5%, in addition to 20% company car tax = £1,250.

Not enormous, but enough to seriously question the merits of owning such a high price car via a company. You can do a lot with £3,250 odd quid.

When you refer to reducing dividends, do you mean compared to last year? If you reduce them and just leave the money in the company then you haven’t lost out. Or maybe I am missing somethin?

 

[mutanthands]

When you refer to reducing dividends, do you mean compared to last year? If you reduce them and just leave the money in the company then you haven’t lost out. Or maybe I am missing somethin?

That's the way I read it.
I'm in the same situation (run my own company, putting the Taycan though it.etc), and that was exactly my thought, too. I need to clarify with my accountant, but like you said, the money isn't being spent, it's just staying in your business account (...depreciating... ?) instead of your personal account.

 

[TaycanHero]

When you refer to reducing dividends, do you mean compared to last year? If you reduce them and just leave the money in the company then you haven’t lost out. Or maybe I am missing somethin?

What I mean is you have essentially lost that as cash income for that tax year.

 

[TaycanHero]

That's the way I read it.
I'm in the same situation (run my own company, putting the Taycan though it.etc), and that was exactly my thought, too. I need to clarify with my accountant, but like you said, the money isn't being spent, it's just staying in your business account (...depreciating... ?) instead of your personal account.

Buying an EV you don't really need to worry about BIK/company car and income tax liabilities as even on a £125k Taycan, it's about £1,250 annually.

On an ICE car that costs £45k, the liability is in excess of £6k.

 

[Midlifecrisis]

That's the way I read it.
I'm in the same situation (run my own company, putting the Taycan though it.etc), and that was exactly my thought, too. I need to clarify with my accountant, but like you said, the money isn't being spent, it's just staying in your business account (...depreciating... ?) instead of your personal account.

Doing similar. The bottom line is that you save the tax on the depreciation. But since it doesn’t look like it will depreciate much there is less advantage to doing it. I suppose you can pay for a charge point and insurance through the company. Rising BIK will wipe out any advantage for me quite quickly I think. I might have to buy the car from the company if BIK shoots up. I am sure a Porsche centre will give a favourable valuation!

 

[TaycanHero]

Doing similar. The bottom line is that you save the tax on the depreciation. But since it doesn’t look like it will depreciate much there is less advantage to doing it. I suppose you can pay for a charge point and insurance through the company. Rising BIK will wipe out any advantage for me quite quickly I think. I might have to buy the car from the company if BIK shoots up. I am sure a Porsche centre will give a favourable valuation!

For me, the tax savings via ltd co are worth it. I expect the car will depreciate at least 20% over three years.

However, the increase to 25% corp tax basically means no reduction in corp tax on the depreciated asset price once the company car is disposed (sold).

Were I to pay myself salary or divis to pay for the car, the tax hit simply wouldn't be worth it. Even if I only paid myself enough for a chunky deposit of £50k, the tax bill would be £15k+.

Buying as a company car, taxes will come nowhere close to that even if BIK does indeed increase to 5% come April 2025. That also factors in paying BIK every year for three years.

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