Convince me to make the change!

[Martinl]

No you can only claim half the vat if you are leasing "contract hire" and in this case you cannot claim capital allowances.

This is correct and I've had it verified via our FD and auditors. The core savings are on the tax via the full capital allowance enjoyed by electric vehicles at the minute. The current low BIK also makes owning the vehicle in a company scenario very attractive.

Frankly the PCP leasing model with the capital allowance in conjunction with the BIK incentives make this a complete no brainer. I'd never have considered a car this expensive except for the tax advantages.

Sponsored

 

[JamieG]

This is correct and I've had it verified via our FD and auditors. The core savings are on the tax via the full capital allowance enjoyed by electric vehicles at the minute. The current low BIK also makes owning the vehicle in a company scenario very attractive.

Frankly the PCP leasing model with the capital allowance in conjunction with the BIK incentives make this a complete no brainer. I'd never have considered a car this expensive except for the tax advantages.

Glad to hear the confirmation.
Do you know how the PCP model compares to Hire Purchase? Is HP as beneficial?

 

[Martinl]

Glad to hear the confirmation.
Do you know how the PCP model compares to Hire Purchase? Is HP as beneficial?

My initial pricing was via HP and it was slightly less favourable for us over a 4 year ownership period. Obviously this is all dependent on your own circumstances. The options list on the Porsche Vs the likes of a BMW also favours the PCP route over HP (because higher end BMWs tend to have everything thrown in)

I feel I need to add that I'm neither an accountant nor financial expert

 

[Squarecircle]

The thread has become somewhat tax related so I will help out here. I am the head of tax for a fairly large firm of accountants.

Putting an electric car through a company is a no brainer. You save a lot of tax and I am selling a lot of Taycan's to clients. They see the car when I turn up for a meeting and the conversation goes "you are clearly doing well" to which I reply, "no not really just saving a lot of tax"

I have covered the PCP v Lease in another thread - depending on the terms PCP can be either lease (50% VAT saving but no Capital allowances) or HP (no VAT reclaim but you can get capital allowances). It all depends on if the car is recognised on the balance sheet or not.

I lease mine and when you factor in corporation tax savings at 19%, VAT savings at 10% and not having to take dividends out to pay for the car, maintenance and insurance personally thereby saving at 32.5% or higher in a lot of cases such as those breaching £100K income, the Taycan costs me 50% less than the headline figure. In fact the Taycan with a lease cost of £1400 a month, costs me the same overall as my Mercedes which I paid for personally at £700 a month.

I lease as I like to change my car every three years and dont want the hassle of selling cars or having them out of warranty. Personal choice that one.

The Merc does not even come close to being the car the Taycan is and I am getting it half price!

To clarify another point, if you are self employed, the car (any car) can be put through the business as a valid expense. You can claim capital allowances (but not on lease) and this in theory saves up to 47% tax (45% higher rate plus 2% Class 4 NIC). However, with the self employed you have to put through a private use adjustment. So if you use the car for 20% business, you can only claim 20% of the 100% allowance. This does not apply to companies and you have a benefit in kind instead of a private use adjustment. If you have a non electric/low co2 car, capital allowances are only 6% or 18% per year and you have to adjust for personal use.

Going back to convincing, I have had a RR Sport and Merc GLC and the Taycan is in a different world. I found the RR to be a poor ride other than on a motorway where it was lovely, just too soft. The tech and build quality was poor and dont even get me started on the useless sat Nav. The Merc was better, better tech, usability and build.

The Taycan is a completely different car as you would expect compared to the 4x4s and I have no regrets. I enjoy driving again with the switch, just so much power and control and the air suspension makes it as good, if not a better ride than the past cars. Also no trips to the petrol station, which is lovely.

I have a dog as well who is banished to the wife's car (Vauxhall Grandland... apparently I have to upgrade this now) so I dont have practicality issues. Hate driving the Vauxhall though!

Hope that helps.

 

[JamieG]

The thread has become somewhat tax related so I will help out here. I am the head of tax for a fairly large firm of accountants.

Putting an electric car through a company is a no brainer. You save a lot of tax and I am selling a lot of Taycan's to clients. They see the car when I turn up for a meeting and the conversation goes "you are clearly doing well" to which I reply, "no not really just saving a lot of tax"

I have covered the PCP v Lease in another thread - depending on the terms PCP can be either lease (50% VAT saving but no Capital allowances) or HP (no VAT reclaim but you can get capital allowances). It all depends on if the car is recognised on the balance sheet or not.

I lease mine and when you factor in corporation tax savings at 19%, VAT savings at 10% and not having to take dividends out to pay for the car, maintenance and insurance personally thereby saving at 32.5% or higher in a lot of cases such as those breaching £100K income, the Taycan costs me 50% less than the headline figure. In fact the Taycan with a lease cost of £1400 a month, costs me the same overall as my Mercedes which I paid for personally at £700 a month.

I lease as I like to change my car every three years and dont want the hassle of selling cars or having them out of warranty. Personal choice that one.

The Merc does not even come close to being the car the Taycan is and I am getting it half price!

To clarify another point, if you are self employed, the car (any car) can be put through the business as a valid expense. You can claim capital allowances (but not on lease) and this in theory saves up to 47% tax (45% higher rate plus 2% Class 4 NIC). However, with the self employed you have to put through a private use adjustment. So if you use the car for 20% business, you can only claim 20% of the 100% allowance. This does not apply to companies and you have a benefit in kind instead of a private use adjustment. If you have a non electric/low co2 car, capital allowances are only 6% or 18% per year and you have to adjust for personal use.

Going back to convincing, I have had a RR Sport and Merc GLC and the Taycan is in a different world. I found the RR to be a poor ride other than on a motorway where it was lovely, just too soft. The tech and build quality was poor and dont even get me started on the useless sat Nav. The Merc was better, better tech, usability and build.

The Taycan is a completely different car as you would expect compared to the 4x4s and I have no regrets. I enjoy driving again with the switch, just so much power and control and the air suspension makes it as good, if not a better ride than the past cars. Also no trips to the petrol station, which is lovely.

I have a dog as well who is banished to the wife's car (Vauxhall Grandland... apparently I have to upgrade this now) so I dont have practicality issues. Hate driving the Vauxhall though!

Hope that helps.

Wow, that's a pretty comprehensive post! Thank you!

Would I be able to drop you a private message as you're clearly on the ball with this sort of stuff and I feel like I'm partly trying to educate my accountant on this subject, not the other way around!

 

[Squarecircle]

No problem and happy to help. Just drop me a DM with any specific queries.

 

[Gogs]

The thread has become somewhat tax related so I will help out here. I am the head of tax for a fairly large firm of accountants.

Putting an electric car through a company is a no brainer. You save a lot of tax and I am selling a lot of Taycan's to clients. They see the car when I turn up for a meeting and the conversation goes "you are clearly doing well" to which I reply, "no not really just saving a lot of tax"

I have covered the PCP v Lease in another thread - depending on the terms PCP can be either lease (50% VAT saving but no Capital allowances) or HP (no VAT reclaim but you can get capital allowances). It all depends on if the car is recognised on the balance sheet or not.

I lease mine and when you factor in corporation tax savings at 19%, VAT savings at 10% and not having to take dividends out to pay for the car, maintenance and insurance personally thereby saving at 32.5% or higher in a lot of cases such as those breaching £100K income, the Taycan costs me 50% less than the headline figure. In fact the Taycan with a lease cost of £1400 a month, costs me the same overall as my Mercedes which I paid for personally at £700 a month.

I lease as I like to change my car every three years and dont want the hassle of selling cars or having them out of warranty. Personal choice that one.

The Merc does not even come close to being the car the Taycan is and I am getting it half price!

To clarify another point, if you are self employed, the car (any car) can be put through the business as a valid expense. You can claim capital allowances (but not on lease) and this in theory saves up to 47% tax (45% higher rate plus 2% Class 4 NIC). However, with the self employed you have to put through a private use adjustment. So if you use the car for 20% business, you can only claim 20% of the 100% allowance. This does not apply to companies and you have a benefit in kind instead of a private use adjustment. If you have a non electric/low co2 car, capital allowances are only 6% or 18% per year and you have to adjust for personal use.

Going back to convincing, I have had a RR Sport and Merc GLC and the Taycan is in a different world. I found the RR to be a poor ride other than on a motorway where it was lovely, just too soft. The tech and build quality was poor and dont even get me started on the useless sat Nav. The Merc was better, better tech, usability and build.

The Taycan is a completely different car as you would expect compared to the 4x4s and I have no regrets. I enjoy driving again with the switch, just so much power and control and the air suspension makes it as good, if not a better ride than the past cars. Also no trips to the petrol station, which is lovely.

I have a dog as well who is banished to the wife's car (Vauxhall Grandland... apparently I have to upgrade this now) so I dont have practicality issues. Hate driving the Vauxhall though!

Hope that helps.

Great post. Makes complete sense.

 

[Fawad]

The thread has become somewhat tax related so I will help out here. I am the head of tax for a fairly large firm of accountants.

Putting an electric car through a company is a no brainer. You save a lot of tax and I am selling a lot of Taycan's to clients. They see the car when I turn up for a meeting and the conversation goes "you are clearly doing well" to which I reply, "no not really just saving a lot of tax"

I have covered the PCP v Lease in another thread - depending on the terms PCP can be either lease (50% VAT saving but no Capital allowances) or HP (no VAT reclaim but you can get capital allowances). It all depends on if the car is recognised on the balance sheet or not.

I lease mine and when you factor in corporation tax savings at 19%, VAT savings at 10% and not having to take dividends out to pay for the car, maintenance and insurance personally thereby saving at 32.5% or higher in a lot of cases such as those breaching £100K income, the Taycan costs me 50% less than the headline figure. In fact the Taycan with a lease cost of £1400 a month, costs me the same overall as my Mercedes which I paid for personally at £700 a month.

I lease as I like to change my car every three years and dont want the hassle of selling cars or having them out of warranty. Personal choice that one.

The Merc does not even come close to being the car the Taycan is and I am getting it half price!

To clarify another point, if you are self employed, the car (any car) can be put through the business as a valid expense. You can claim capital allowances (but not on lease) and this in theory saves up to 47% tax (45% higher rate plus 2% Class 4 NIC). However, with the self employed you have to put through a private use adjustment. So if you use the car for 20% business, you can only claim 20% of the 100% allowance. This does not apply to companies and you have a benefit in kind instead of a private use adjustment. If you have a non electric/low co2 car, capital allowances are only 6% or 18% per year and you have to adjust for personal use.

Going back to convincing, I have had a RR Sport and Merc GLC and the Taycan is in a different world. I found the RR to be a poor ride other than on a motorway where it was lovely, just too soft. The tech and build quality was poor and dont even get me started on the useless sat Nav. The Merc was better, better tech, usability and build.

The Taycan is a completely different car as you would expect compared to the 4x4s and I have no regrets. I enjoy driving again with the switch, just so much power and control and the air suspension makes it as good, if not a better ride than the past cars. Also no trips to the petrol station, which is lovely.

I have a dog as well who is banished to the wife's car (Vauxhall Grandland... apparently I have to upgrade this now) so I dont have practicality issues. Hate driving the Vauxhall though!

Hope that helps.

Hi, I’m still at loss and your advise would be appreciated. My choices are:

purchase outright through my limited company OR Lease (HP/CH/PCP)

for maximum tax benefits, which do you advise and if lease which type

 

[DMTaycan]

Hi guys, I'm trying to convince myself that there's too many incentives that will far outweigh the cons of larger monthly payments than my existing car deal and the depreciation of the Taycan over a 3 year PCP deal and what decision to take at the end. Please help convince me!

Here is a finance spreadsheet I've been working on.
Here is my PCP offer.
Here is my car spec.

In the UK, we have a 0% company car tax incentive on electric vehicles.
Essentially meaning, if your company buys a £90,000 electric vehicle, then your company tax cost for that tax year will be reduced by £90,000. If you do not use all this amount up, it can also be passed back from the previous tax year and you'll receive a rebate.
(In my mind this reads; choose to pay company tax and receive nothing in return, or buy an electric car and pay zero company tax - free car!)

I currently have a Range Rover Velar on a personal hire purchase agreement.
To pay this and the insurance and road tax, I have to withdraw a dividend from my company each month. My personal tax bracket is 32.5%.

Looking at what I can afford, I can comfortably make the £901 monthly payment for the Taycan. I could also save the additional £1400 per month to make the final balloon payment. Though it would make sense to put this amount (£51k) into paying off my house mortgage!

After reviewing my spreadsheet, my questions would be:

1. Roughly what is the extra monthly/year cost of changing from the Velar to the Taycan?
2. What will I have lost in estimated depreciation value on the Taycan at the end of the agreement? Saw something here about MSRP, but don't quite understand that.
3. Would I be wise to roll my Taycan equity into a new Porsche car, or make the final balloon payment? Considering the developments of battery technology.
4. Each branch I've spoken to have advised me to add the performance battery pack option as it will help with the residual value. But I can't see the cost of this option (£4600) nearly repaying itself in residual value after 3 years. Am I correct in thinking this?
5. Is there any other monetary benefits I'm not thinking about in making this switch? Other than receiving the cash lump sum of my Velar back to my personal account without being taxed?

In my mind:

Pros:

• Better car (looks/drive).
• No more refuelling/saving earth.
• Cash lump sum paid back to my personal account.
• If my spreadsheet is correct, the cost of the car will be roughly be reduced by £25-30k through tax benefits.
• I'd expect combustion cars to depreciate faster in value than EV's once they become to be proven.

Cons:

• Larger monthly payments (if intending to pay balloon amount).
• Losing boot space for my labrador dog (only other car in the household is a Vauxhall Astra!)
• Not purchasing the equity of the car like I currently am with the Velar.
• In 17 more months, I'd have paid off my Velar and own it outright with no further monthly car payments. Whereas I'm tying myself into a new 3 year commitment with the Taycan and no guarantee of owning it outright by the end.

Other Notes:

• In the 19 months of having the Velar I have only done 8,000 miles. I work from home and don't really have to commute to work meetings. 4-6 of these months I would have normally done more miles if COVID wasn't a thing.
• I could make use of the government bounce back loan.

Thanks ever so much in advance!

My understanding from my accountant is that PCP does not qualify or is doubtful. HP or outright purchase qualify for capital allowance. You would receive relief on tax, meaning you would save paying £19,500 on £100’000 electric car. Your company cash will still decrease by £80,000. Also outright purchase allow you to offset this against the company‘s income from this year and last year. If you do a HP, I believe you would not be able to claim the 100% capital allowance in the first year but it will be spread dependent on the yearly expenditure [for first year it would be deposit plus monthly payments]. in addition you need to factor in the interest paid over the HP agreement.
I agree this is on one hand an emotional purchase, which is very expensive, even though an electric car is the most sensible long term option and makes financial sense if purchased through a company, especially if you can also combine this by retrieving some personal cash from your current car.
to justify purchasing a Taycan, I think it should be kept for few years and not short term, but there will always be another tempting car in one or two years. Ultimately, life is too short, one try to be reasonable financially, but enjoy it while you can

 

[DMTaycan]

Hi guys, I'm trying to convince myself that there's too many incentives that will far outweigh the cons of larger monthly payments than my existing car deal and the depreciation of the Taycan over a 3 year PCP deal and what decision to take at the end. Please help convince me!

Here is a finance spreadsheet I've been working on.
Here is my PCP offer.
Here is my car spec.

In the UK, we have a 0% company car tax incentive on electric vehicles.
Essentially meaning, if your company buys a £90,000 electric vehicle, then your company tax cost for that tax year will be reduced by £90,000. If you do not use all this amount up, it can also be passed back from the previous tax year and you'll receive a rebate.
(In my mind this reads; choose to pay company tax and receive nothing in return, or buy an electric car and pay zero company tax - free car!)

I currently have a Range Rover Velar on a personal hire purchase agreement.
To pay this and the insurance and road tax, I have to withdraw a dividend from my company each month. My personal tax bracket is 32.5%.

Looking at what I can afford, I can comfortably make the £901 monthly payment for the Taycan. I could also save the additional £1400 per month to make the final balloon payment. Though it would make sense to put this amount (£51k) into paying off my house mortgage!

After reviewing my spreadsheet, my questions would be:

1. Roughly what is the extra monthly/year cost of changing from the Velar to the Taycan?
2. What will I have lost in estimated depreciation value on the Taycan at the end of the agreement? Saw something here about MSRP, but don't quite understand that.
3. Would I be wise to roll my Taycan equity into a new Porsche car, or make the final balloon payment? Considering the developments of battery technology.
4. Each branch I've spoken to have advised me to add the performance battery pack option as it will help with the residual value. But I can't see the cost of this option (£4600) nearly repaying itself in residual value after 3 years. Am I correct in thinking this?
5. Is there any other monetary benefits I'm not thinking about in making this switch? Other than receiving the cash lump sum of my Velar back to my personal account without being taxed?

In my mind:

Pros:

• Better car (looks/drive).
• No more refuelling/saving earth.
• Cash lump sum paid back to my personal account.
• If my spreadsheet is correct, the cost of the car will be roughly be reduced by £25-30k through tax benefits.
• I'd expect combustion cars to depreciate faster in value than EV's once they become to be proven.

Cons:

• Larger monthly payments (if intending to pay balloon amount).
• Losing boot space for my labrador dog (only other car in the household is a Vauxhall Astra!)
• Not purchasing the equity of the car like I currently am with the Velar.
• In 17 more months, I'd have paid off my Velar and own it outright with no further monthly car payments. Whereas I'm tying myself into a new 3 year commitment with the Taycan and no guarantee of owning it outright by the end.

Other Notes:

• In the 19 months of having the Velar I have only done 8,000 miles. I work from home and don't really have to commute to work meetings. 4-6 of these months I would have normally done more miles if COVID wasn't a thing.
• I could make use of the government bounce back loan.

Thanks ever so much in advance!

Another comment. The potential 29k you could get back from the velar is equal to 40k in dividends [at your rate]. It all depends on the nature of your company and the need for cash reserves and the amount of cash In the company, but an outright purchase may work well if you refrain from issuing yourself 40k of dividends this year. You would save the 11k in interest and claim 100% of the capital allowance, thus reducing the company’s tax bill by about 18k. That is 58k less in year one.
Regarding depreciation, if you change your mind in say 3 years, I think that saving the 11k interest would compensate any decrease in possible value if you sell privately. Should the cash reserves be needed then the smallest car loan from a non Porsche source may be sensible.

 

[JamieG]

Another comment. The potential 29k you could get back from the velar is equal to 40k in dividends [at your rate]. It all depends on the nature of your company and the need for cash reserves and the amount of cash In the company, but an outright purchase may work well if you refrain from issuing yourself 40k of dividends this year. You would save the 11k in interest and claim 100% of the capital allowance, thus reducing the company’s tax bill by about 18k. That is 58k less in year one.
Regarding depreciation, if you change your mind in say 3 years, I think that saving the 11k interest would compensate any decrease in possible value if you sell privately. Should the cash reserves be needed then the smallest car loan from a non Porsche source may be sensible.

Thanks for your advice and you are right, it is an emotional purchase.

@Squarecircle has been magnificent and has walked me through all the financial pros and cons. I can't thank him enough.

As long as the test drive goes well tomorrow, I'll be placing my order immediately thereafter. I already have a deposit and early December delivery slot reserved. Can't wait to get into the car now!

 

[Squarecircle]

@Fawad Ultimately depends on a number of factors but, in general:

Lease (or PCP treated as lease) results in the greatest tax savings as you can reclaim 50% of the VAT and all costs as they arise. Lowest cash flow impact as well.

Outright purchase/HP potentially has the greatest cash flow impact for tax as you can often write off the cost 100% in year 1 - long term there is likely a claw back though.

If you definitely want to keep the car then HP/PCP is the way to go. If you don't want to, lease is probably the way to go.

This of course ignores the other commercial impacts of finance terms, interest charges, cash differences etc, which should not be ignored and are often more important than the tax consequences.

 

[jheard]

Hi guys, I'm trying to convince myself that there's too many incentives that will far outweigh the cons of larger monthly payments than my existing car deal and the depreciation of the Taycan over a 3 year PCP deal and what decision to take at the end. Please help convince me!

Here is a finance spreadsheet I've been working on.
Here is my PCP offer.
Here is my car spec.

In the UK, we have a 0% company car tax incentive on electric vehicles.
Essentially meaning, if your company buys a £90,000 electric vehicle, then your company tax cost for that tax year will be reduced by £90,000. If you do not use all this amount up, it can also be passed back from the previous tax year and you'll receive a rebate.
(In my mind this reads; choose to pay company tax and receive nothing in return, or buy an electric car and pay zero company tax - free car!)

I currently have a Range Rover Velar on a personal hire purchase agreement.
To pay this and the insurance and road tax, I have to withdraw a dividend from my company each month. My personal tax bracket is 32.5%.

Looking at what I can afford, I can comfortably make the £901 monthly payment for the Taycan. I could also save the additional £1400 per month to make the final balloon payment. Though it would make sense to put this amount (£51k) into paying off my house mortgage!

After reviewing my spreadsheet, my questions would be:

1. Roughly what is the extra monthly/year cost of changing from the Velar to the Taycan?
2. What will I have lost in estimated depreciation value on the Taycan at the end of the agreement? Saw something here about MSRP, but don't quite understand that.
3. Would I be wise to roll my Taycan equity into a new Porsche car, or make the final balloon payment? Considering the developments of battery technology.
4. Each branch I've spoken to have advised me to add the performance battery pack option as it will help with the residual value. But I can't see the cost of this option (£4600) nearly repaying itself in residual value after 3 years. Am I correct in thinking this?
5. Is there any other monetary benefits I'm not thinking about in making this switch? Other than receiving the cash lump sum of my Velar back to my personal account without being taxed?

In my mind:

Pros:

• Better car (looks/drive).
• No more refuelling/saving earth.
• Cash lump sum paid back to my personal account.
• If my spreadsheet is correct, the cost of the car will be roughly be reduced by £25-30k through tax benefits.
• I'd expect combustion cars to depreciate faster in value than EV's once they become to be proven.

Cons:

• Larger monthly payments (if intending to pay balloon amount).
• Losing boot space for my labrador dog (only other car in the household is a Vauxhall Astra!)
• Not purchasing the equity of the car like I currently am with the Velar.
• In 17 more months, I'd have paid off my Velar and own it outright with no further monthly car payments. Whereas I'm tying myself into a new 3 year commitment with the Taycan and no guarantee of owning it outright by the end.

Other Notes:

• In the 19 months of having the Velar I have only done 8,000 miles. I work from home and don't really have to commute to work meetings. 4-6 of these months I would have normally done more miles if COVID wasn't a thing.
• I could make use of the government bounce back loan.

Thanks ever so much in advance!

I will let others who are more expert to give you feedback on most of this however I would say that if you decide to PCP the car then don’t pay the balloon, EV and battery technology will be making huge leaps forward over next 3-4 years. I have just experienced this with my Tesla. Just hand the car back and start again or what people usually do and I would recommend for an EV is 6 months prior to the end of agreement change car for a new model and hopefully the trade in will settle the finance

 

[Persuader]

I will let others who are more expert to give you feedback on most of this however I would say that if you decide to PCP the car then don’t pay the balloon, EV and battery technology will be making huge leaps forward over next 3-4 years. I have just experienced this with my Tesla. Just hand the car back and start again or what people usually do and I would recommend for an EV is 6 months prior to the end of agreement change car for a new model and hopefully the trade in will settle the finance

Well surely that decision would be made by comparing market value vs balloon payment at that time and not before.

 

[JamieG]

Well surely that decision would be made by comparing market value vs balloon payment at that time and not before.

On top of this, making monthly overpayments will lower the total interest cost over the 3 Year period. If I don’t pay the final payment off with these monthly overpayments, I can still transfer that equity into a new Porsche at the end. Which is the route I’ll take I think.

That said, I believe my dad will change his Taycan Turbo S after the third year, so I might buy that from him!

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