Buying a low emission car

A question about : Buying a low emission car

Hi all

As a sole trader, I've previously only bought cars personally and just claimed back the mileage allowance. Someone mentioned recently about the lower benefit in kind tax for low emission company cars & whilst this doesn't apply to me, I'm wondering if there might be a potential tax saving.

This page:
https://www.bbc.co.uk/news/business-12218018
States:
Quote:

Also:
Quote:

Assume this doesn't apply to sole traders?

Thanks

Best answers:

• Hi all
  As a sole trader, I've previously only bought cars personally and just claimed back the mileage allowance. Someone mentioned recently about the lower benefit in kind tax for low emission company cars & whilst this doesn't apply to me, I'm wondering if there might be a potential tax saving.
  This page:
  https://www.bbc.co.uk/news/business-12218018
  States:
  Quote:
  Let us suppose a wife is receiving a modest salary of Ј5,000, and her husband - a sole trader or partner - chooses to buy her a car.
  If the wife's remuneration package, including the car benefit, is under the lower limit of Ј8,500 per year she remains outside the scope of benefit-in-kind taxation.
  As the husband is a partner or sole trader - rather than a director or employee - he cannot be taxed either, making his wife's car completely tax free.
  Also:
  Quote:
  Because of low emission levels, a company is able to write down 100% of the cost of the car against its profits chargeable for Corporation Tax in year one.
  This is compared to a traditional company vehicle where a maximum of 18% per annum of the cost is allowable to write down against the profits chargeable for Corporation Tax. This is reduced to only 8% on vehicles with a CO2 level exceeding 130g/km.
  Assume this doesn't apply to sole traders?
  Thanks
  This bit applies to sole traders and Income tax, of course and a sole trader may trade as a company.
• Thanks,
  Found a bit more info here:
  https://www.gov.uk/capital-allowances/business-cars
• The Ј8,500 threshold is probably going to be abolished shortly - there's been the consultation document, so the announcement is probably in this year's budget.
  The "value" of the work done by the wife has to be realistic and similar to open market value, so you can't give the wife a wage "value" of Ј8,500 for a couple of hours per week of relatively low value work. If I remember rightly, there was a case like this where a wife was given a company car, but the costs were disallowed as business expenses because an unconnected third party employee wouldn't get a car for the type and scale of work done - i.e. it was just a perk by virtue of being the wife!
  Anyway, why not just pay the wife a wage of Ј10,000 (if she does that much work), which will be tax free, virtually no NIC, and the husband (employer) gets full tax relief on the Ј10,000 wage paid. Then she could use the Ј10k p.a. wage to finance the car!
• Sole trader = unincorporated personal "self employment".
  Limited or Unlimited Company are incorporated entities, not personal, and not "self employment" nor "sole trader".
  You're not "self employed" nor a "sole trader" if you operate via an incorporated entity, whether it be a limited or unlimited company.