Offered a cancelled build slot

[Keith]

Okay.... so Ive been offered a cancelled build slot (UK) ...

I am buying via a limited company....... cor tax going up to 25 %. Shooting from the hip a bit here....... should I grab this build slot or wait until the next financial year (my accountant is away !!!) ..... I think I know the answer, so please don't mob me !!!!!!!! Cheers

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[mandoyoda]

You might want to go for it if the car gets delivered after April next year to get the CT relief, but your accountant knows better.

If you go with PCP, then you will get CT relief in the financial year you make the final balloon payment. With cash, you get CT relief at the end of that financial year.

 

[Speuk]

I'm not sure the tax rate at the time of purchase is that relevant. Yes you will defer more tax if the 25% rate is in force but the main consideration is the rate in force when you sell. Assuming you take 100% first year relief in year 1 then the car will sit in its own tax pool at £0 so you'll pay tax on the sale price at the tax rate at that time.

 

[Edinburger]

You might want to go for it if the car gets delivered after April next year to get the CT relief, but your accountant knows better.

If you go with PCP, then you will get CT relief in the financial year you make the final balloon payment. With cash, you get CT relief at the end of that financial year.

My car is due to arrive around the end of this year and will be bought outright by my company. Our company financial year runs until the end of September, so it is my understanding that in the UK we will qualify for the CT saving at the 25% rate. The downside to that is that the rest of the company's profits for the entire year will be taxed at this higher rate.
I also understand that if and when the vehicle is sold, then the full sales price achieved will be treated as bottom line profit.
Still - the 25% saving in the short term helps to justify a few more extras at the time of purchase!

 

[Edinburger]

Sorry - double post....... In answer to your initial question - the offer of a cancelled build slot seems brilliant. Whilst car sales might be about to slow down due to economic factors, the Taycan depreciation curve is likely to be shallower than most and it is a brilliant car.
Also, the sooner you can get it, the more benefit in kind benefit you can enjoy. The government won't make it as attractive as this to own a Porsche for many more years!

 

[Rob********]

The answer to the original question is entirely dependant on how you intend to acquire it. Cash, business lease, etc. If delivered before April 2023, and you pay cash, you will only benefit from 19% relief. If delivered before April 2023 and you do a business lease for example, your first payment or two may be at 19%, but the rest at 25%.

 

[TaycanHero]

I will assume a cash purchase. If so, buy it this tax year as you will be reducing corp tax by £5-8k depending on your profits from 23 tax year onwards, unless you never intend to sell the car of course.

No point waiting either if you are lucky enough to have got a build slot.

 

[Rob********]

My understanding is as follows - With a cash purchase in a business, you get 100% CT relief. On a £100k car, that means the whole cost can go against your profits for the current financial year and you get a £19k reduction in CT. If you bought it after April 2023, you would get £25k tax relief on it against next years profits.

 

[Edinburger]

My understanding is as follows - With a cash purchase in a business, you get 100% CT relief. On a £100k car, that means the whole cost can go against your profits for the current financial year and you get a £19k reduction in CT. If you bought it after April 2023, you would get £25k tax relief on it against next years profits.

On this point - my company tax year runs from 1st October to 30th September. I am assuming that I will have to pay 25% CT on all of my 22/23 profit and on that basis, presumably as long as the car is bought within that financial year (even if that is Deecmber 22), then it will qualify for the 100% CT relief at the 25% rate?

 

[Rob********]

On this point - my company tax year runs from 1st October to 30th September. I am assuming that I will have to pay 25% CT on all of my 22/23 profit and on that basis, presumably as long as the car is bought within that financial year (even if that is Deecmber 22), then it will qualify for the 100% CT relief at the 25% rate?

That's one for an accountant.

 

[Andy S]

My understanding based upon the fact that you do one set of accounts at the end of the company financial year is that you would use the CT rate that is in effect at the time of posting the accounts. Therefore in the example of company tax year ending 30th Sept (as my company tax tear does) then you can claim relief at 25%, noting that you will also be paying 25% against any declared profits too!

 

[XKSS]

My understanding is that the current CT rate is largely irrelevant - assume a £100k purchase - if you make £250k profits in the tax year you buy an EV you get a 100% Writing down allowance not CT relief - so your effective profits after "cash" buying the car are then £150k with C.tax due at the prevailing rate - the 19 or 25% is only relevant as to what you'll lose in tax on the remaining £150k declared profits.

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