Hello Andy, thank you for the video, I have two questions: 1) On 07:52, I heard you mentioned that your accountant had given you the option to pay a little bit of extra tax (due to your Personal Allowance being deducted), or take a salary cut. I imagine you were talking about how much salary you are paying yourself from your limited company in order to remain below the PA threshold. My question is, what is the most efficient way to be paying yourself as a limited company owner? Is it a mixture of regular salary (Non-savings income) and dividends? 2) In terms of the BiK, you need to declare it in your Self-Assessment, but HMRC also reduces your Personal Allowance automatically, is that how it works? If so, aren't you in a way "double-taxed", because more of your income is now taxed due to the lower PA and you also pay extra tax because of the BiK? I apologise if I've misunderstood the concept, but I will be curious to hear from you on that! Thank you for the video, very useful information! Best regards.
Hi there! 1. Depends on personal circumstances but yes, generally max out your personal allowance and the rest dividends. There's a few good vids on YT explaining the exact numbers. 2. No, the Self Assessment is really just to double check everything is correct at year end. If you keep your salary below the new personal allowance there's no BIK to pay... by my understanding. 👍
There are additional benefits of being provided with a BEV through a company. These can include the company purchase of an EV charger, and electricity for running the company car. Also other costs such as insurance, road fund licence, repairs etc. You need to consider carefully the nuances on two decisions: (a) purchase or lease? and (b) brand new or "pre loved". These are all valid options, but with very different tax considerations from a company's perspective. Finally, also consider whether your vehicle is "VAT qualifying" - if your company is VAT registered, then this can be another way of optimising your tax position.
Great info! As far as I'm aware to qualify for 100% in-year expensing it needs to be brand new. With the resulting depreciation it can sometimes be more cost effective to buy pre-loved. Some absolute bargains out there! 👍
Indeed! Even with the 100% WDA for brand new, I'd probably plump for 2nd hand. After all, the difference between being able to take a 100% WDA in yr1 vs over the life of the asset is merely that of timing of the tax relief - in the long run it all balances out. (although the "VAT qualifying" aspect does make a net difference). @@SmallBusinessToolbox
I think you can return VAT only for commercial vehicles used solely for business and there are no VAT benefits if vehicle is in personal use. :) maybe I’m wrong but that what I’ve read about online.
@@christophermo13 yes you need to ensure you are aware of any restrictions such as zero personal use etc. As always, do your own research, and remember that rules change frequently.
Thanks for this position about to get an EV thru my limited company. The bit I don't get is personal mileage so you need to track this and you pay 8p for?
Hopefully an accountant can chip in as this is all quite new but I think the 8p (now 10p?) is a reimbursement from the company for business miles in a company car. AFAIK there's no need to track personal mileage but don't hold me to that! 👍😁
@@SmallBusinessToolbox I will check that out, I thought you had to tax on personal usage of a company car. As a wider point I don't know why they make tax so complicated in this country. It's almost made esoteric so to confuse people
@@SmallBusinessToolbox the EV scale rate is 10p per mile (I think) vs 45p per mile for ICE (1st 10,000 miles per year, at least). This is the max amount the company can reimburse you for legitimate business mileage, without it being classed as an additional BIK. This means in practice that you can be paid 10p per mile for legitimate and tracked business mileage. I'd suggest something simple like a spreadsheet tracker with date, purpose, start and end point (postcode /address if possible), mileage. That can then be used to justify the cost / claim.
@@kevinlally7653 thanks so am I right in saying , if it's for personal mileage in a business car. You have to pay a rate in tax ? So also needs to be tracked ?
@@roscopeco2000 No. The personal use of a business car is already covered through the "benefit in kind" tax and NI that the video covers. The only tracking is of business mileage for which you are claiming the fuel (electricity) costs.
Hello Andy, thank you for the video, I have two questions:
1) On 07:52, I heard you mentioned that your accountant had given you the option to pay a little bit of extra tax (due to your Personal Allowance being deducted), or take a salary cut. I imagine you were talking about how much salary you are paying yourself from your limited company in order to remain below the PA threshold. My question is, what is the most efficient way to be paying yourself as a limited company owner? Is it a mixture of regular salary (Non-savings income) and dividends?
2) In terms of the BiK, you need to declare it in your Self-Assessment, but HMRC also reduces your Personal Allowance automatically, is that how it works? If so, aren't you in a way "double-taxed", because more of your income is now taxed due to the lower PA and you also pay extra tax because of the BiK? I apologise if I've misunderstood the concept, but I will be curious to hear from you on that!
Thank you for the video, very useful information!
Best regards.
Hi there!
1. Depends on personal circumstances but yes, generally max out your personal allowance and the rest dividends. There's a few good vids on YT explaining the exact numbers.
2. No, the Self Assessment is really just to double check everything is correct at year end. If you keep your salary below the new personal allowance there's no BIK to pay... by my understanding. 👍
There are additional benefits of being provided with a BEV through a company. These can include the company purchase of an EV charger, and electricity for running the company car. Also other costs such as insurance, road fund licence, repairs etc.
You need to consider carefully the nuances on two decisions: (a) purchase or lease? and (b) brand new or "pre loved". These are all valid options, but with very different tax considerations from a company's perspective.
Finally, also consider whether your vehicle is "VAT qualifying" - if your company is VAT registered, then this can be another way of optimising your tax position.
Great info! As far as I'm aware to qualify for 100% in-year expensing it needs to be brand new. With the resulting depreciation it can sometimes be more cost effective to buy pre-loved. Some absolute bargains out there! 👍
Indeed!
Even with the 100% WDA for brand new, I'd probably plump for 2nd hand. After all, the difference between being able to take a 100% WDA in yr1 vs over the life of the asset is merely that of timing of the tax relief - in the long run it all balances out.
(although the "VAT qualifying" aspect does make a net difference).
@@SmallBusinessToolbox
I think you can return VAT only for commercial vehicles used solely for business and there are no VAT benefits if vehicle is in personal use. :) maybe I’m wrong but that what I’ve read about online.
@@christophermo13 yes you need to ensure you are aware of any restrictions such as zero personal use etc. As always, do your own research, and remember that rules change frequently.
Thanks for this position about to get an EV thru my limited company. The bit I don't get is personal mileage so you need to track this and you pay 8p for?
Hopefully an accountant can chip in as this is all quite new but I think the 8p (now 10p?) is a reimbursement from the company for business miles in a company car. AFAIK there's no need to track personal mileage but don't hold me to that! 👍😁
@@SmallBusinessToolbox I will check that out, I thought you had to tax on personal usage of a company car. As a wider point I don't know why they make tax so complicated in this country. It's almost made esoteric so to confuse people
@@SmallBusinessToolbox the EV scale rate is 10p per mile (I think) vs 45p per mile for ICE (1st 10,000 miles per year, at least). This is the max amount the company can reimburse you for legitimate business mileage, without it being classed as an additional BIK.
This means in practice that you can be paid 10p per mile for legitimate and tracked business mileage.
I'd suggest something simple like a spreadsheet tracker with date, purpose, start and end point (postcode /address if possible), mileage. That can then be used to justify the cost / claim.
@@kevinlally7653 thanks so am I right in saying , if it's for personal mileage in a business car. You have to pay a rate in tax ? So also needs to be tracked ?
@@roscopeco2000 No. The personal use of a business car is already covered through the "benefit in kind" tax and NI that the video covers.
The only tracking is of business mileage for which you are claiming the fuel (electricity) costs.
Yabba dabba dolike