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Discussion Starter #1
Seems mad.
But taking 40k cash and buying a tesla sr+ costs x amount.
Starting business, buying a vat free car costs 32k
Then leasing it to youself(second wage) would be almost tax free.
 

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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.
 

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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.
Could you not claim VAT back if you worked as an UBER or Lyft driver as a VAT registered LTD company?
 

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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.


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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Discussion Starter #5
Also you have to charge VAT when you sell car. Probably not worth it for lowly Uber rates.

Yeah but you can depricate the entire car to 0 over company ownership.

And sell it for a pound to yourself?

Here you are hmrc... 20p
 

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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.
There’s nothing fraudulent in setting up a special purpose vehicle to own your Tesla.

What HMRC rule are you thinking of?
 

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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.
 

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There’s nothing fraudulent in setting up a special purpose vehicle to own your Tesla.

What HMRC rule are you thinking of?
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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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.
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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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.
The VAT rules are clear, but we are talking about BIK here.
 

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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.
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.
 

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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?
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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Discussion Starter #14
There’s probably not any benefit unless you can receive untaxed income (that would normally be subject to income tax) through the company.
so the BIK isn’t something I can leverage and I bet millions are in a similar position
This suggest otherwise...
 

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This suggest otherwise...
Well, this is Sole Trader, not a limited company.

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”...
 

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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
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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I don’t understand

I work for a massive company

move only ever used cycle to work scheme

JJ
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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