Start a business just to take advantage off bik?
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You can't claim the VAT back unless you're a private hire business or a small number of other trades.
Edited to say the above was meant to suggest that your idea won't work unless you really are going to set up a business. HMRC would more than likely question your first VAT return and the reclaim without any sales (or even with). Unless they can see you have a legitimate trade (insurance, website etc etc) then they would suggest you've acted fraudulently, best case fine you up to 100% of the VAT you would have saved, through to worst case of putting you in prison.
Edited to say the above was meant to suggest that your idea won't work unless you really are going to set up a business. HMRC would more than likely question your first VAT return and the reclaim without any sales (or even with). Unless they can see you have a legitimate trade (insurance, website etc etc) then they would suggest you've acted fraudulently, best case fine you up to 100% of the VAT you would have saved, through to worst case of putting you in prison.
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Could you not claim VAT back if you worked as an UBER or Lyft driver as a VAT registered LTD company?
Possibly, but if you register for VAT you would need to pay HMRC 20% VAT out of your fares, so probably not worth doing. Also you have to charge VAT when you sell car. Probably not worth it for lowly Uber rates.
Reclaiming VAT
What you can and cannot reclaim, VAT on cars, commercial vehicles and fuel, VAT on staff travel expenses
How VAT applies to taxis and private hire cars (VAT Notice 700/25)
Find out how to apply VAT if you're in the taxi and private hire car trade.
To get benefit of BIK you need to be a Ltd company and there is cost of accountant to file accounts, etc. You also have to fund the car (eg lease) from trading profit. Unfortunately I am winding down my company and don't now trade enough to even buy a new Zoe
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17,341 Posts
There’s nothing fraudulent in setting up a special purpose vehicle to own your Tesla.
What HMRC rule are you thinking of?
Interesting thread. We already run a business as a partnership and are starting to look at converting to Ltd to effectively avoid tax on the entire capital and running costs of the car. Will probably need to discuss with the accountant, but just mulling it over for now.
To claim the VAT on a motor car, you must have a relevant trade. Otherwise it'd be fraudulent to claim the VAT back.
An SPV is a type of business set up for a specific purpose, but isn't really relevant to the issue of a motor car and VAT.
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17,341 Posts
There’s probably not any benefit unless you can receive untaxed income (that would normally be subject to income tax) through the company.
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17,341 Posts
The VAT rules are clear, but we are talking about BIK here.
I'd argue this thread is about the VAT...
Only your accountant can answer that as it'll depend on your trade, income and a number of other variables. Essentially it's whether the saving of the electric car in a limited company is worthwhile over the saving of an electric car in a partnership PLUS other savings as a partnership.
You can claim the VAT back in those circumstances whether Limited or not. But the point remains that claiming back VAT depends on the circumstances. Plus to claim the VAT back it must be mainly used for private hire.
Given the ongoing issues for UBER and IR35 (separate topics), I'd probably recommend being self employed rather than limited. Given their average income, there isn't much in it with regards to self-employed vs limited tax costs.
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How to offset losses against PAYE as a sole trader
If, while employed and paying tax, I also set up as a sole trader, can I offset any trading losses against the PAYE I pay through my self-assessment?
smallbusiness.co.uk
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17,341 Posts
Well, this is Sole Trader, not a limited company.This suggest otherwise...How to offset losses against PAYE as a sole trader
If, while employed and paying tax, I also set up as a sole trader, can I offset any trading losses against the PAYE I pay through my self-assessment?
So you’d need to show HMRC a genuine business and 10 hours per week of work to justify it.
Fine if you have some trade on the side with some income.
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Tax used to be my subject before retirement... You can only reclaim VAT to the extent that you use the car for a relevant trade. Leasing it back to yourself as part of a tax scheme will not be treated as a business. To be treated as a BiK you need to be doing enough work of value at least equal to the benefit. The loss offset against PAYE is a completely different relief, not relevant to this.
There was a tax case about a century ago where the taxpayer represented herself in a fruitless claim. In the judgment the judge advised her that “if you spend your time reading tax cases and the like it will drive you silly”...
There was a tax case about a century ago where the taxpayer represented herself in a fruitless claim. In the judgment the judge advised her that “if you spend your time reading tax cases and the like it will drive you silly”...
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3,694 Posts
I was reading that an employer can set up to be able to do this through salary sacrifice
like cycle to work scheme or childcare vouchers
anyone seen any info?
JJ
like cycle to work scheme or childcare vouchers
anyone seen any info?
JJ
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17,341 Posts
Yes, you can do this.
The question is where is your tax free income coming from to make it worth the extra cost and time to do this?
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3,694 Posts
I don’t understand
I work for a massive company
move only ever used cycle to work scheme
JJ
I work for a massive company
move only ever used cycle to work scheme
JJ
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17,341 Posts
Well, the BIK tax for EVs is a form of tax relief. For that you need taxable income.
If you are buying your car with already taxed income then where is the saving?
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