Ready to throw in the towel

[Murph7355]

Doesn't the yearly deperiation of assets dectract from corp tax (capital allowances), therefore you are writing off 18% of the value (£18,000/year on a £100k car) and then saving the corp tax on that amount on a yearly basis which is future years will be at a higher percentage than currently (19% vs 25%).

£100k new car 100% write off in the first year = £19k corp tax saving year 1

£100k used car 18% first year = £3420 saving year 1 (19%), £4,500 saving year 2 (25%), £4,500 saving year 3 etc etc.

I'm not an accountant but that is my understanding of it.

That's how I understand it too.

As cars usually depreciate quickly, the 100% write down in yr1 was useful. But Taycans aren't depreciating heavily. So the advantage is lessened. Still very useful from a cashflow perspective though.

OP - understand your frustration. Posted similar on the other thread. I'm keeping the deposit in for now and will see how things progress. I don't need the deposit amount right now and I'm losing SFA in interest on it. So it's no loss.

In the meantime will keep an eye on what other manufacturers bring out. The wait situation will likely be the same with them to a degree...though some may be less impacted by some factors (e.g. there's less risk UK factories, or those in Asia etc will be hit with power supply issues).

We'll see.

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[gordietbh]

You might be correct, though this is why we hire accountants ?

I would check with your accountant, but doubtlessly buying a new Taycan is still a large corp tax saving, as it's unlikely you'll keep the car 5+ years.

Yes but in reality it's only helping cashflow is my point.

The saving will ultimately be the same both ways if both cars are sold for the same amount in 3 years time as you're only saving the CT on the depriciation so you don't get to keep that 100% saving forever.

That's how my man maths worked out when deciding I couldn't wait for one anyway!

 

[matchboy1976]

Doesn't the yearly deperiation of assets dectract from corp tax (capital allowances), therefore you are writing off 18% of the value (£18,000/year on a £100k car) and then saving the corp tax on that amount on a yearly basis which is future years will be at a higher percentage than currently (19% vs 25%).

£100k new car 100% write off in the first year = £19k corp tax saving year 1

£100k used car 18% first year = £3420 saving year 1 (19%), £4,500 saving year 2 (25%), £4,500 saving year 3 etc etc.

I'm not an accountant but that is my understanding of it.

You have to account for depreciation when calculating the corp tax tax saving (it’s not an allowable expense) - so you don’t save 19k on a 100k taycan, you save 19k less 19% of depreciation charged (let’s say 15% reducing balance so just under 3k off the 19k - so it’s 16k saved in year one. Obvs depreciation will be less each year so the big hit is in year one.

A lot of accountants will charge a full year’s depreciation in year one - this may not be what you want when putting such an expensive asset through the company. So, my advice (and yes I am an accountant ?) is when they prepare any of your accounts to make sure they’re only charging the correct amount of depreciation eg. Your company year end is March 23, you purchased the taycan in December 22 - if they put through a full years charge that’s 15k (if they’re depreciating it at 15% RB);it should only be £3750 as the company has only owned the car for 3 months. Overall it makes no difference over the course of the lifetime the company owns the car, but it may be beneficial to not take that full whack of depreciation in year 1, depends on how long you’ll keep the car. If they are putting through a full years charge make sure they explain the reason for that, with some figures too based on the tax savings in year 1 compared to, say, year 3 when you sell it.

Also, don’t forget if the capital allowances claimed on the taycan put the company into a loss for the year from a corporation tax perspective, you don’t lose those allowances - they can be carried forward to the following year ??

 

[DynamoCappo]

Is there any off-set against the sale value of it if you're buying another new one or will the tax break be done by then?

I've nearly got my head round the depreciation and how it works on the figures but if you buy another new one in 2025, does that help?

Trying to convince myslef when immediately putting down a deposit for another one would be a good idea when I take delivery of mine (if it ever arrives)

 

[matchboy1976]

Is there any off-set against the sale value of it if you're buying another new one or will the tax break be done by then?

I've nearly got my head round the depreciation and how it works on the figures but if you buy another new one in 2025, does that help?

Trying to convince myslef when immediately putting down a deposit for another one would be a good idea when I take delivery of mine (if it ever arrives)

Yes, if you buy another one in 3 years time - and assuming the rules are the same - then yes it will offset against the adjustment that will be made on the sale of your current one. It’s a big if though, as I would not expect the rules to be the same in 2025 as they are now, so don’t hold your breath we’ll get the same allowances in the future (I would expect the allowance rate to be dropped significantly and also I would expect HMRC to bump up the benefit in kind percentage).

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