Lease vs Buy

[Lfcdan]

Just to update I ended up with a Porsche PCP through my business at 6.1% APR, £110k list price, £55k deposit and £55k GFV after 3 years and 30k miles. I’m happy with that. Applying for OLEV grant now to try to get in the queue before it potentially runs out.

i’m sure the dealer applies for the OLEV grant and not you
It’s on my paperwork from Porsche so I assume they have started the process

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[dryii]

i’m sure the dealer applies for the OLEV grant and not you

I agree. With a lease the car is not yours, therefor you won't get any EV discount.

 

[DavidE- Bath]

i’m sure the dealer applies for the OLEV grant and not you
It’s on my paperwork from Porsche so I assume they have started the process

yep it’s the dealer applying but apparently they need to know if the car is being financed or not and what name (or company name) it is going to be registered in to lodge the initial application

it’s a finance purchase rather than lease so expecting to benefit from the £3.5k towards my deposit

 

[Lfcdan]

yep it’s the dealer applying but apparently they need to know if the car is being financed or not and what name (or company name) it is going to be registered in to lodge the initial application

it’s a finance purchase rather than lease so expecting to benefit from the £3.5k towards my deposit

thats my understanding too, I think they will need to register the car on the government portal before the budget to lock in the OLEV grant, if they don’t then if the grant is reduced or removed in the upcoming budget it would miss out

 

[jetbox]

Just to update I ended up with a Porsche PCP through my business at 6.1% APR, £110k list price, £55k deposit and £55k GFV after 3 years and 30k miles. I’m happy with that. Applying for OLEV grant now to try to get in the queue before it potentially runs out.

hi, I didn’t think the individual applied for olev? I thought the dealer didn’t direct And the 3.5k was just subtracted from the price?

( noting that this may change come the budget on the 11th)

 

[mikerheywood]

Hi

Im in the U.K. and I’m wondering whether to lease or buy my 4s which is scheduled for delivery late April/early May. I have a limited company so can do a business lease, or just buy it outright. It works for me to buy it through my company either way with the BIK rates so low.

The thing that’s got me thinking is being unsure how residuals will go and thinking a business lease would remove that uncertainty.

Against it is I might want to keep the car after a 3 year lease period.

Interested in others thoughts.

Best
David.

Hi David

I'm similar to you in I run a limited company. My accountant has suggested buying as I can offset the entire cost against year 1 profits saving corporation tax. Might be worth discussing with your accountant.

 

[DavidE- Bath]

Hi David

I'm similar to you in I run a limited company. My accountant has suggested buying as I can offset the entire cost against year 1 profits saving corporation tax. Might be worth discussing with your accountant.

hi there

as I understand it I can claim 100% first year allowance up front even though I’m financing it on a contract purchase (as opposed to lease). When I sell it or hand it back the value received for the car is a taxable gain but that’s okay as at least that charge is deferred for a while

 

[Lfcdan]

hi there

as I understand it I can claim 100% first year allowance up front even though I’m financing it on a contract purchase (as opposed to lease). When I sell it or hand it back the value received for the car is a taxable gain but that’s okay as at least that charge is deferred for a while

That’s correct David, if you lease you can just offset 19% of the total annual payments each year
as i said before if you finance the car then you can also offset the APR against tax

 

[mikerheywood]

hi there

as I understand it I can claim 100% first year allowance up front even though I’m financing it on a contract purchase (as opposed to lease). When I sell it or hand it back the value received for the car is a taxable gain but that’s okay as at least that charge is deferred for a while

hi, that's right, tax is payable on the sale value in the corp tax rate in effect in the year of sale - which is making me think i'll hang on to mine for a while!

 

[Squarecircle]

May be helpful if I summarise the position for people (saves asking your accountant). The below assumes a VAT registered limited company:

Lease:
Corporation tax relief on the monthly payments and deposit which is currently 19%
50% of the VAT on the monthly payments can be reclaimed
100% of the VAT on maintenance payments can be reclaimed

Buy (outright or HP):
100% First year allowance - so full write off against corporation tax at 19% in the year of acquisition.
Corporation tax relief on the interest element of the HP
No VAT reclaimable on the purchase (Some people may say differently and argue it is 100% business use and therefore the VAT can be reclaimed. I have seen many clients try this against my advice and fail, HMRC are very very against any claim like this and will be all over any attempt)
100% of VAT is reclaimable on maintenance payments.
If you sell the car, there will likely be a claw back of corporation tax relief on the value of the proceeds at whatever corporation tax rate applies at the time.

Summary:

I prefer to lease as I like to change car every three years and the VAT reclaim is worth it as well.

For those that are purchasing the cars in the company, remember it is only advantageous to do so at the moment as the benefit in kind rates are so low for electric cars. The idea of a Porchse as a company car was a big no until the Taycan due to high list price and high emissions. The government likes to play with the car benefit in kind rates a lot, so do not be surprised if in two/three years the rules are changed and cars like the Taycan suffer much higher benefit rates. If that happens, you will need to get the car out of the company (sell it) to avoid some hefty annual tax charges. This sale will then trigger the likely corporation tax claw back.

Personally, I can only see electric car benefit rates being low for three years or so. Once enough people have swapped to electric cars and the government see how much they are losing on company car benefit tax, they will change the rules. Same happened with diesel cars.

 

[pjb]

Again buying through the company, using effectively a PCP type contract so have ownership of the vehicle so get 100% FYA but also have GFV to protect from residuals if bad however in my case the idea is to buy off the company at end of 3 years when I may retire.

Currently driving a s/h Tesla X just over 2 years old, Cost £84k new bought for £61k having done just over 9k miles so at present residuals not great for electric cars, but I think given the drive to electric especially in the UK we are going to see some residuals improve althoigh that is not going to happen until we sort out charging network.

Live in rural Oxfordshire & seeing 5 miles per hour charging at home - not got a proper charger in yet as having to dig up the drive, rather brings into focus that overnight my range has only gone up by 55 miles, funny how your thoughts change was always happy with Cayenne Hybrid charging overnight to give me 23 miles but not so when only electric !

 

[pjb]

Personally, I can only see electric car benefit rates being low for three years or so. Once enough people have swapped to electric cars and the government see how much they are losing on company car benefit tax, they will change the rules. Same happened with diesel cars.

You are 100% correct they love to change the rules, we had Hybrid's when BIK was 5% now 16% on the same cars. Make hay whilst the sun shines always better to fund in a company, than fund out of taxed income

 

[Duc959]

Sorry to bump an old thread, but I am currently contemplating PCP/Buy and to me it costs less to buy via ltd company?

 

[Lfcdan]

Sorry to bump an old thread, but I am currently contemplating PCP/Buy and to me it costs less to buy via ltd company?

My Turbo is due to the dealer on the 10th and They have advised that all being well it will be ready for collection on the 15th

I’m still awaiting a revised PCP quote (been waiting 10day) but I’m pretty sure ill be leasing as it makes far more financial sense

 

[Gogs]

Sorry to bump an old thread, but I am currently contemplating PCP/Buy and to me it costs less to buy via ltd company?

You can also consider a company lease purchase. Basically it’s a hire purchase agreement. That way you can deposit 50%, pay the rest over whatever term you want. Claim capital allowances year 1. That’s what I’m thinking of doing. Pay enough tax already!

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