BMW i3 as company car in the UK

[DJCeeJay]

I am due to replace my 3 series BMW with a new company car, and I am considering the BMW i3. I thought I share some of the financial considerations for others in the same situation, as the company car tax rate is changing in the coming years.

Part of the attraction of the i3 is the low company car tax. In fact, until April 2015 there is 0% BIK (Benefit in Kind) on Ultra Low Emission vehicles like the i3 BEV. However this is changing.
- There will be a new 0-50 g/100 km BIK band introduced from April 2015.
- It will be set at 5% of the P11D value (car price) in 15/16, rising to 7% in 16/17.
- Beyond this, there are further increases, with a minimum difference remaining to the higher bands. In my calculation, 17/18 will be 9%, and 18/19 will be 13% for 0-50 g/100 km band. This is important as my car scheme defaults to 4 year leases.
- It will also mean than now the REX will be in the same band as the BEV, although of course there will be higher company car tax due to higher P11D value, and a higher lease cost.

http://www.fleetnews.co.uk/volkswagen-fleet-tax-guide/companycartax.html

When it comes to the lease rate, the i3 is actually quite attractive, compared to the cars list price. I am surprised by this, given the low production volumes, and the high depreciation I have read about.
- i3 BEV Suite (top interior world with leather, without REX) is about £80 per month CHEAPER to lease than a 520d SE Auto, whilst both have the same list price (around £33,000).
- Even with the increasing company car tax in coming years, the net cost per month is substantially lower than the 520d, for example.

So for me, I will test drive one in the coming weeks before placing my order, alongside other cars including the Audi A3 etron plug in hybrid. What this space.

Are there any other company car drivers in the UK on here ? What are your experiences ?

 

[nowtta60]

I run my own company - the savings for owner director are even better. Not only the BiK saving but also you can write off the value of the whole car against corporation tax in the first year of ownership. This may be why lease rates are good as the lease company will be doing that.

Will save me about £6,600. IF you have a normal ie. ICE car and it's less than 120g/km you can only write off 20% of the value per yer. More than 120g/km - it's nothing. Obviously this is only if you are purchasing the car as an asset not leasing. (But you can still sell it later).

Also don't forget the fuel savings - EV miles works out about 1-2p mile VS 10-12p on liquids.

I did a big post about it here...

http://www.mybmwi3.com/forum/viewtopic.php?f=3&t=1315&start=0

On page 2 I've done a spreadsheet working out the out of pocket costs compared to a 120d. Instead of taking cash and paying 40% tax - effectively you can get the i3 for just over £19,000 of salary sacrifice. After the section where I do BiK there a bit on fuel costs so you can work out your expected REX Vs electric miles and see what the savings vs the diesel would be. IIRC if you are doing more than 20,000 miles a year or all your trips are longer than 150 miles (so rex use is 60%) you need a diesel. I just read it back and realised it needs an update! The bit on what 60% means is wrong.

** Disclaimer I am not an accountant so do your own research and / or a spreadsheet. **

IF you are looking at the xls - there are two pages - 1 for a Tesla and 1 for an i3.

 

[psquare]

Hi there,

Thank you for all the interesting details you have provided. I'm in a very similar position (UK-based freelancer with own limited company), currently using (as per advice from accountant) my private car and claiming mileage - just as you did.

One question re mileage: Doesn't the EV company car purchase only make sense if you do low business mileage? I can usually claim between 6k and 12k business miles per year, which is currently 45p/25p and therefore adds up to £2700 - £5000 per year. This private mileage claim also lowers liability for Corp Tax, so cancels out the single write-off Corp Tax saving of about £6000 you mentioned.

I am not an expert in this area (actually in conversation with my accountant as we speak), so please let me know if I am not making any sense.

Thanks,
P

 

[amateurish]

When it comes to the lease rate, the i3 is actually quite attractive, compared to the cars list price. I am surprised by this, given the low production volumes, and the high depreciation I have read about.
- i3 BEV Suite (top interior world with leather, without REX) is about £80 per month CHEAPER to lease than a 520d SE Auto, whilst both have the same list price (around £33,000).
- Even with the increasing company car tax in coming years, the net cost per month is substantially lower than the 520d, for example.

So for me, I will test drive one in the coming weeks before placing my order, alongside other cars including the Audi A3 etron plug in hybrid. What this space.

Are there any other company car drivers in the UK on here ? What are your experiences ?

I am a company car driver, and changed my 520d for an i3. My annual cost savings are approx £2k in tax and £2k in fuel. So a cool £12k over the term of my 3 year lease. I highly recommend it.

 

[amateurish]

Hi there,

Thank you for all the interesting details you have provided. I'm in a very similar position (UK-based freelancer with own limited company), currently using (as per advice from accountant) my private car and claiming mileage - just as you did.

One question re mileage: Doesn't the EV company car purchase only make sense if you do low business mileage? I can usually claim between 6k and 12k business miles per year, which is currently 45p/25p and therefore adds up to £2700 - £5000 per year. This private mileage claim also lowers liability for Corp Tax, so cancels out the single write-off Corp Tax saving of about £6000 you mentioned.

I am not an expert in this area (actually in conversation with my accountant as we speak), so please let me know if I am not making any sense.

Thanks,
P

I may be missing the point entirely here, but isn't the disadvantage to the situation you describe the fact that you have to buy your own car (out of taxed income)? If the question is - what is the cheapest way to acquire a new car?

 

[psquare]

Hi there,
I may be missing the point entirely here, but isn't the disadvantage to the situation you describe the fact that you have to buy your own car (out of taxed income)? If the question is - what is the cheapest way to acquire a new car?

Fair point. If the money to purchase the car is taken out of the business anyway (for example to make other private purchases/investments), then you pay income tax (lower/higher bracket) either way.

If you compare it to a scenario where the money would be retained in the business then that changes things. The purchase lowers the CT liability and doesn't attract income tax in this case.

Thanks!
P

 

[pastyboy]

Hi there,

Thank you for all the interesting details you have provided. I'm in a very similar position (UK-based freelancer with own limited company), currently using (as per advice from accountant) my private car and claiming mileage - just as you did.

One question re mileage: Doesn't the EV company car purchase only make sense if you do low business mileage? I can usually claim between 6k and 12k business miles per year, which is currently 45p/25p and therefore adds up to £2700 - £5000 per year. This private mileage claim also lowers liability for Corp Tax, so cancels out the single write-off Corp Tax saving of about £6000 you mentioned.


You need to look at the larger picture. You can still claim 14p per mile for a Rex (ass it is a hybrid in the terms of the tax system) but I guess you are losing some of that CT saving by the difference in costs. Unfortunately the low servicing costs don't help in that area but I think the spreadsheet is an accurate reflection of the savings to be made.

Thanks,
P

 

[psquare]

I've had a little email to-and-fro with my accountant today.

Over 3 years, there is a saving of about £4k-£5k (depending on pure EV or REx) to be made by switching from private purchase / mileage claim vs comp car purchase. Bear in mind that this is something that is based on my situation, so as mentioned above, please talk this through with an accountant. Your situation might be better or worse.

This is obviously in addition to the savings in fuel, which for us would be between £1.5k - £2k per year (at current electricity and liquid fuel prices).

Test drive tomorrow!

Thanks,
P

 

[PipPip]

I am due to replace my 3 series BMW with a new company car, and I am considering the BMW i3. I thought I share some of the financial considerations for others in the same situation, as the company car tax rate is changing in the coming years.

Part of the attraction of the i3 is the low company car tax. In fact, until April 2015 there is 0% BIK (Benefit in Kind) on Ultra Low Emission vehicles like the i3 BEV. However this is changing.
- There will be a new 0-50 g/100 km BIK band introduced from April 2015.
- It will be set at 5% of the P11D value (car price) in 15/16, rising to 7% in 16/17.
- Beyond this, there are further increases, with a minimum difference remaining to the higher bands. In my calculation, 17/18 will be 9%, and 18/19 will be 13% for 0-50 g/100 km band. This is important as my car scheme defaults to 4 year leases.
- It will also mean than now the REX will be in the same band as the BEV, although of course there will be higher company car tax due to higher P11D value, and a higher lease cost.

http://www.fleetnews.co.uk/volkswagen-fleet-tax-guide/companycartax.html

When it comes to the lease rate, the i3 is actually quite attractive, compared to the cars list price. I am surprised by this, given the low production volumes, and the high depreciation I have read about.
- i3 BEV Suite (top interior world with leather, without REX) is about £80 per month CHEAPER to lease than a 520d SE Auto, whilst both have the same list price (around £33,000).
- Even with the increasing company car tax in coming years, the net cost per month is substantially lower than the 520d, for example.

So for me, I will test drive one in the coming weeks before placing my order, alongside other cars including the Audi A3 etron plug in hybrid. What this space.

Are there any other company car drivers in the UK on here ? What are your experiences ?

I've taken a Rex model as a company car as the lower BIK, low lease rates and company providing free charge points meant financially it was very compelling. It worked out similar to a 1.4TSI Golf on our scheme (before allowing for fuel savings). I only do 10,000 miles a year and my commute is 18 miles each way so the i3 suits my circumstances (my wife and I have a Volvo XC60 for longer journeys).

 

[nowtta60]

Hi there,

Thank you for all the interesting details you have provided. I'm in a very similar position (UK-based freelancer with own limited company), currently using (as per advice from accountant) my private car and claiming mileage - just as you did.

One question re mileage: Doesn't the EV company car purchase only make sense if you do low business mileage? I can usually claim between 6k and 12k business miles per year, which is currently 45p/25p and therefore adds up to £2700 - £5000 per year. This private mileage claim also lowers liability for Corp Tax, so cancels out the single write-off Corp Tax saving of about £6000 you mentioned.

I am not an expert in this area (actually in conversation with my accountant as we speak), so please let me know if I am not making any sense.

Thanks,
P

Your correct to raise this.. and is something I haven't built into my spreadsheet yet. Its what my accountant has always told me to do! As others have said you need to compare the mileage reclaim figures vs cost of buying a car yourself. I typically do about 12-15,000 miles so drop back to the 25p/mile rate.

The assumption being that the owning and running the car costs less than 45p/mile so you personally make a bit of "profit". PRobably the besy way to compare this is use the leasing rates of various cars. Like for like you can see what you get charged for a 10,000 mile contract including maintenance, look at the excess mileage charges, and you can work out how much "profit" you get on claimed VS cost. As an example, I'm currently driving a 1.6 Juke Accenta Premium an a all inclusive lease, which was £224/month + 6 months up front. £6,496 for 24 months. Ouch! But I've claimed nearly 22,000 miles at 45p / mile so about £9000. (some at 25p). Making me £3000 of "profit". Until you add fuel costs! And insurance! + 4,000 excess miles at 6p.mile Spreadsheet required but basically I don't think a personal lease was as good as the i3 thru the company

I'm pretty sure the best way to keep money in your pocket is run a 10 year old Mk 4 Golf 1.9Tdi and claim the mileage. But if you want a new car , that also comes with autonomous driving in 25mph traffic that runs on batteries charged at home using green or nuclear electric ... Frankly the spreadsheets don't really help, other than adding the logic to the emotional purchase decision. LOL.

Yet to work out If/how I can expense the company for electric used to charge the car - considering the leccy bill will probably double! Maybe a 2nd meter required ( I should know as I've worked on/off in energy billing for about 10 years ). Hoping to get a new contract with one of the big 6 - who often have workplace charging

 

[nowtta60]

Rather than start a new thread - though I should tag this onto here...

When driving a company car you get the option to pay for your own fuel or have it provided by the company and pay BiK on that. As most of the trips I do for personal use will be in range of the battery... there will be no actual fuel usage. Just off peak electric. Anyone got experience of how is this treated on the P11D?

Second - as it's a company car, I want to stick a meter on the EVSE so I can reclaim the electric usage from the company. I'm expecting a doubling of my bill (but 1/10 the price of unleaded so not really an issue). Someone pointed this EVSE company out in another thread...

http://www.rolecserv.com/ev-charging/news/view/ROLEC-OFFERS-FREE-16AMP-AND-32AMP-CHARGING-POINTS

...which has a nice option (presumably an upgrade fee applies) of a mini meter inside the EV itself. I like the fact the other option is for an extra outdoor socket - handy for jet washers and lawnmowers. Are there any other companies doing something similar. Most of the ones I've seen are a basic box + lead.

Plan B does the i3 itself track energy usage accessible either via the menus or the app? Even better - can it email my accounting software and submit the P11d values. LOL.

 

[DJCeeJay]

Rather than start a new thread - though I should tag this onto here...

When driving a company car you get the option to pay for your own fuel or have it provided by the company and pay BiK on that. As most of the trips I do for personal use will be in range of the battery... there will be no actual fuel usage. Just off peak electric. Anyone got experience of how is this treated on the P11D?

Second - as it's a company car, I want to stick a meter on the EVSE so I can reclaim the electric usage from the company. I'm expecting a doubling of my bill (but 1/10 the price of unleaded so not really an issue). Someone pointed this EVSE company out in another thread...

http://www.rolecserv.com/ev-charging/news/view/ROLEC-OFFERS-FREE-16AMP-AND-32AMP-CHARGING-POINTS

...which has a nice option (presumably an upgrade fee applies) of a mini meter inside the EV itself. I like the fact the other option is for an extra outdoor socket - handy for jet washers and lawnmowers. Are there any other companies doing something similar. Most of the ones I've seen are a basic box + lead.

Plan B does the i3 itself track energy usage accessible either via the menus or the app? Even better - can it email my accounting software and submit the P11d values. LOL.

On the first point, the treatment of electric cars like the i3 is no different in principle to other fuels. This means the appropriate P11D value is multiplied by specific BIK % for the prevailing tax year. The company car tax calculator on the HMRC website should show this. It is worth noting that the 0% BIK will cease from coming tax year, as per my original post in this thread, so the cost will shoot up for private fuel use. I don't think it will ever make sense to "opt in" to the private company fuel, as the tax on it is so large in comparison to the cost paying yourself.

On the second point, i don't know to be honest how you would claim back fuel cost for business usage. My company has a reimbursement policy in line with the HMRC guidelines. The latest one is here. http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm It only refers to hybrids, not to all electric cars. Perhaps you will need to talk to your employer or to HMRC directly. Depending on the answer, you may not need a meter, but can claim on a flat rate per mile basis alone.

 

[nowtta60]

I've since found all the EVSE points in the UK have built in metering with GRPS modem to send the data back to OLEV. Parts of the condition of getting the grant so they can build up a picture of EV usage. Also means you can see if yourself and claim your electricity as expenses. Simple. As part of the survey they check what the O2 network coverage is like as that's who they use.

 

[DerfSdrawd]

On the second point, i don't know to be honest how you would claim back fuel cost for business usage. My company has a reimbursement policy in line with the HMRC guidelines. The latest one is here. http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm It only refers to hybrids, not to all electric cars. Perhaps you will need to talk to your employer or to HMRC directly. Depending on the answer, you may not need a meter, but can claim on a flat rate per mile basis alone.

See the HMRC guidelines here: http://www.hmrc.gov.uk/manuals/eimanual/EIM23900.htm

There is no BIK on electricity because it is not "fuel" within the meaning of the tax legislation. Which is nice.....