Convince me to make the change!

[Fawad]

@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.

Thanks @Squarecircle. I don’t plan to keep the car with a plan to move on after 24 or 36months. Are you saying that with outright purchase I’ll have to payback some of the relief. Is it safe to assume that the allowance upfront covers 5 years of depreciation

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[Gogs]

Nobody knows what the value of the car will be in 3 years. I’ve done a few pcp’s in the past, every time it would have been better financially to have paid cash at the beginning. The reality of pcp is that when you come to trade in, the residual is not enough to keep the continued payments similar, so you either need a large deposit in 3 years to top it off or, you are happy with a larger monthly payment. PCP isn’t for me, I prefer to have a known end where I’ll own the car, then at that point I can keep it, sell it, trade it do whatever I want with no restrictions. Arguably you can do that with the ballon payment. So work out the cost of PCP vs HP vs Cash.

 

[jheard]

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

Of course, but the math has never worked for me and I like a new car every 3 years anyway so would never pay the balloon

 

[Squarecircle]

@Fawad that is correct. The capital allowances just cover the depreciation. So whatever the car is sold for, the over claim of tax relief is then repayable on this on this number.

If the company is vat registered and you only want to keep the car for 2 or 3 years i would look at contract hire.

 

[Fawad]

@Fawad that is correct. The capital allowances just cover the depreciation. So whatever the car is sold for, the over claim of tax relief is then repayable on this on this number.

If the company is vat registered and you only want to keep the car for 2 or 3 years i would look at contract hire.

@Squarecircle, not PCP?

 

[Squarecircle]

Possibly pcp depending on how your accountant treats it. As lease or HP.

 

[Fawad]

Possibly pcp depending on how your accountant treats it. As lease or HP.

@Squarecircle

Possibly pcp depending on how your accountant treats it. As lease or HP.

@Squarecircle your advice has been appreciated. I think the best solution is Contract Hire as I don’t have to worry about residual, we’ll receive tax relief and from what I gather I can claim 50% of the VAT

 

[ron_b]

You may find this video relevant to this discussion.
https://www.taycanforum.com/forum/t...is-cheaper-than-the-panamera-autotrader.2336/

 

[JamieG]

You may find this video relevant to this discussion.
https://www.taycanforum.com/forum/t...is-cheaper-than-the-panamera-autotrader.2336/

Cheers. Have already seen it and placed my order by this point. Delivery date ETA end of November Counting down the weeks!

 

[schwar]

Hey all,

Not that I don't believe my accountants, but I'm worried that in all the conversations I've not fully understood the situation (too excited to get my first Porsche, and first electric car). Everyone here seems way more versed on this subject than I am so I wondered if you could give me your opinion.

I majority own a limited company, and most of my remuneration is in dividends paying higher rate tax. I barely drive for work, probably under 20% of my driving. Until now I've always leased my petrol cars privately, but I've now got my Taycan Turbo ordered, and the intension is for the company to buy it outright. Delivery should be before the end of March cut-off date for the 100% First Year Allowance, but there is also the option of hire purchase if it was better.

The company has higher than usual profits this year and money doing nothing sitting in the bank. Is the outright purchase and 100% First Year Allowance the best way to go, does this give the most savings? I'm unsure how long I'll keep the car, probably 3 or 4 years because it seems perfect from the test-drive. What are the VAT implications, if any? I read something about claiming 50% back, but I don't know if that applies? What about adding a charger to my home - is there anything I can claim there.

Thank you in advance for any advice.

 

[Persuader]

You don't have to cash purchase to benefit from up to 100% 1st year allowance. It is still allowable on HP & PCP. But obviously you have to repay part when you sale car based on sale price. Personally I have only claimed 30% 1st year allowance. Everyone's circumstances are different.
50% VAT reclaim only applicable to leasing ie contract hire.
You need to google and learn all about this.

 

[RG2020]

Hey all,

Not that I don't believe my accountants, but I'm worried that in all the conversations I've not fully understood the situation (too excited to get my first Porsche, and first electric car). Everyone here seems way more versed on this subject than I am so I wondered if you could give me your opinion.

I majority own a limited company, and most of my remuneration is in dividends paying higher rate tax. I barely drive for work, probably under 20% of my driving. Until now I've always leased my petrol cars privately, but I've now got my Taycan Turbo ordered, and the intension is for the company to buy it outright. Delivery should be before the end of March cut-off date for the 100% First Year Allowance, but there is also the option of hire purchase if it was better.

The company has higher than usual profits this year and money doing nothing sitting in the bank. Is the outright purchase and 100% First Year Allowance the best way to go, does this give the most savings? I'm unsure how long I'll keep the car, probably 3 or 4 years because it seems perfect from the test-drive. What are the VAT implications, if any? I read something about claiming 50% back, but I don't know if that applies? What about adding a charger to my home - is there anything I can claim there.

Thank you in advance for any advice.

Congratulations, and join the club. My first Porsche & electric car too.

This sounds like it could be an exam question!

Correct - when a UK company purchases a qualifying car (which the Taycan is), currently it gets first year allowances. So the full cost of the car (including any VAT which you can't claim back) is deducted against the taxable profits. So essentially the car costs 81% after tax.

I'd have thought from what you've said that the company won't be able to reclaim any input VAT on the purchase of the car, this is usually the case. But check with your accountants.

Hire purchase would be a similar situation, as the company would still have the car on its balance sheet but would have corresponding finance over X number of years to pay for the car.

The 50% VAT reclaim probably comes from contract hire, this is where the company has the car on effectively a long-term hire (usually 3 years). 100% of the VAT on any maintenance element plus 50% VAT on finance can usually be claimed by the company.

So to work out what's best value you need a bit of a crystal ball to decide what the Taycan will be worth in X years when you want to change it. Subtract that from what you paid for it, less CT deduction, plus CT payable on the sale price at 19% and that gives you the headline cost for the period. That's for a cash purchase, if you use finance then obviously need to add the finance charges less CT at 19%.

Contract hire is the total contract price over the period, less qualifying VAT, less CT deductions at 19%.

You can claim the grant for installing charger at your home but only if the company doesn't reimburse you for it. I believe the company can pay for a charger at work premises and claim VAT back and claim it as a business expense against taxable profits, but I believe no grant is available to the company.

Also speak to your accountant about the electricity used to charge the car. I have previously said I'll read up on this again but haven't had time yet, I believe if you charge the car at home and pay for the electricity through your home bill as normal, and recharge it to the company it might be subject to tax & NI. However if you charge the car at work, and the company pays the electricity bill there is no tax & NI to pay, regardless of what proportion of that electricity is for personal mileage. So the company seemingly has to pay directly for the electricity.

It seems an odd rule which is why I want to re-read to make sure I haven't misunderstood but that's the way I've understood it so far.

 

[schwar]

Thanks for the help @Persuader and @RG2020. Can't wait for the Taycan! It sounds like the 100% First Year Allowance is going to work out best (providing the car arrives in time), as there is the tax saving, and then the saving on the interest of HP & PCP? Hopefully, Taycan residuals will be decent compared to other electric cars.

 

[bootsie]

My accountant was happy for me to charge the costs for installing the charger at home back to the company, including my required consumer unit upgrade. I didn't take the OLEV grant at home but you could as long as the installer billed your company.
There is an OLEV grant for workplace charger installs too, £350 per unit I believe but it's only for untethered (i.e. no fixed charge cable) installs. I've had two companies so far ignore my requests for a quote so I can't tell you any more right now..
My accountant also things I'm good to charge the company 4p per mile for charging at home if I want to as per the Advisory Fuel Rates here.

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