New Car - Get My Co. to buy it or buy personally

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mik_da_man

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Hi,

I'm going to buy a new (to me) car soon and am wondering which is best.

1. Buy the car through my company as a company car and pay BIK
2. Buy the car personally and pay myself milage expenses (as I currently do)

My business milage is about 80% of the milage that car will do

Anyone have expierence of this?

Thanks

Mik
 
You can do out a spreadsheet to compare the costs of each option, or an accountant could provide you with the same for a fee, but the knee-jerk response from me is that there is rarely any significant financial benefit in having the company buy it for your personal use, so I would recommend buy it yourself and pay yourself the appropriate mileage rate.
 
when you say new (to me) do you mean a second-hand car?

If so then don't do it through the company; BIK is based on the original list price of the car, not what you actually pay for it.

If it is new then it's more complex (depreciation against profit and other issues etc) but usually marginally better to go through the company. Worth talking to your accountant.
 
it would most likley be a second hand car.
I'd buy new if it was worth it.

In relation to the BIK, I've figured out how much in total I would have to pay in Tax and PRSI.
How is the payment of this split out?
Is it on a per month basis over a set number of years?..
 
I'm not a fan of the BIK option because of the administration involved. Don't forget you'd also have to file a form to show BIK collected (Form P11D methinks??). Also, as coppers pointed out, the BIK is charged on OMV, not cost or current value.

I find it better to buy the car personally and charge any mileage back to the company at the appropriate civil service rate.

Mik, (not trying to bbe funny but) I'm assuming it's a limited company you have. If you're a sole trader then there's no BIK issue here at all.
 
mik_da_man said:
it would most likley be a second hand car.
I'd buy new if it was worth it.

In relation to the BIK, I've figured out how much in total I would have to pay in Tax and PRSI.
How is the payment of this split out?
Is it on a per month basis over a set number of years?..
Click to expand...

AFAIK you are taxed on 1/3 of the omv of the car EVERY year as long as you own it. This can be paid on a month by month basis.

If your car cost 30k you will pay approx 4.7k in tax in year 1, 4.7k in year 2, etc etc
 
billythefish said:
Mik, (not trying to bbe funny but) I'm assuming it's a limited company you have. If you're a sole trader then there's no BIK issue here at all.
Click to expand...

Yep I have a Ltd Co so the BIK is an issue

coppers said:
AFAIK you are taxed on 1/3 of the omv of the car EVERY year as long as you own it. This can be paid on a month by month basis.

If your car cost 30k you will pay approx 4.7k in tax in year 1, 4.7k in year 2, etc etc
Click to expand...

When I checked the figures for the car i'm looking at it's 40%
If it's second hand it does not look worth it at all, if it's new it looks ok.
I'll run my figures past my accountant to see what she says.
 
The general rule is, if the business mileage is high keep the car in your own name and the mileage and subsistence claims will be more than enough to cover any tax, insurance and maintenance.

If the business mileage is low, register the car in the company name and the company can pay the tax, insurance and repairs.

I've donr this exercise alot in the past, if you want any more info just send me a pm.
 
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