Family car planning for limited companies
Are you a Director of a Ltd Company?
Do you wish to provide a family member with a car for their personal use?
If so read on:
There are considerable savings to be made by purchasing a brand new car for your son/daughter through your Company. The child does not even have to work for the Company. The brand new car has to be a low emission car, i.e. currently CO2 emissions of below 95 grams.
If done correctly, the Company will claim a 100% deduction in respect to the car, together with a deduction for running expenses. The Company will also be able to recover 20% VAT input tax on the car repair and servicing.
As the car is being provided for a family member, the car benefit will be charged to the Director. However, provided that the car is low emissions, the benefit will be at 10% of the list price for a petrol car, and 13% for a diesel.
Fiat 500 .09 Twin Air Colour Therapy
CO2 emissions 90
Benefit £12,710 @ 10% = £1271 taxed @ 40% = £508.40.
This is obviously a much cheaper way of providing family members with a car than paying for it personally.
If you are interested, and require further information, Green & Co would be happy to give further advice.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.