The Business Exchange Swindon & Wiltshire Edition 25: June/July 2016 | Page 12

FINANCE Hear it from the experts… Stunning tax breaks on electric cars Sometimes you know something in theory but it only hits home when you work it out. I knew that it is not usually worth buying petrol/diesel cars through a company because they result in very high taxable benefits-in-kind on the directors/employees PLUS it takes several/ many years to write-off the cost of such cars against the profits of the company. In contrast, electric cars have relatively low benefits-in-kind PLUS they benefit from 100% tax write-off against profits in the first year. I recently worked out the tax breaks on an electric car for a friend. I compared the figures for buying an electric car through a company, against using personal dividends cash to buy a petrol/diesel car. The comparison stunned me! Electric Car If you take £30,000 of profit from a company to buy an electric car for personal use: Car cost = £30,000. Tax = nil (apart from a relatively small benefit in kind each year). Petrol/Diesel Car If you use £30,000 to pay dividends out and buy a petrol/diesel car for personal use, you will need to leave the Corporation Tax in the company (at 20% = £6,000) and take a £24,000 dividend. Then you must set aside money for income tax on the dividend (marginal rate: income tax 22.5% + dividend tax 7.5% = £7,800), leaving £16,200 available for a petrol/diesel car. Car = £16,200 Tax = £13,800 Conclusion So, in option 1, you get a car worth an extra £13,800 instead of the tax man getting it. As electric cars become more available/ cheaper/more accepted, I expect to see more and more bought as company cars. Peter Bromiley ACA AMS Accountancy Ltd, 01793 818400 www.ams-accountancy.co.uk/about-us/ ask-ams Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400 Can I give shares from my Company to my child? I’m asked this quite often because of the new dividend tax - April 2016. If your child is under 18, then your dividends would still need to be shown on your tax return (a law called s.660b). Also, any transfers of shares to a connected person – apart from a spouse – means the shares must be valued at market value and Capital Gains Tax may be due – so a tax calculation will be needed. Finally, if you do transfer shares to a child over 18, you must make sure any dividends go to the child and don’t end up back in your hands – otherwise HMRC may consider it to be tax manipulation. If you have a genuine desire to pass on the business to your child – you should seek advice. Peter Bromiley ACA www.ask-ams.co.uk @AMSAccountancy www.ams-accountancy.co.uk Salisbury bookkeeping firm achieves Investors in People Sandra Silk Bookkeeping and Business Services is celebrating being awarded Investors in People. The accreditation comes at a time of growth for the company as it has doubled in size in the last 18 months and now employs a team of six. Managing director Sandra Silk said:"I chose to do Investors in People because I wanted to have a reason to review and focus on the building blocks of the business before we grew any bigger. The team are our biggest asset and sharing the business plan, setting out the company structure and putting together a training and development plan gave everyone a sense of purpose and belonging. “It took several months to prepare for Investors in People and we couldn't have done it without the support of Spire Business Solutions who interpreted the criteria, applied it to our business and worked with the team. There were some challenging aspects for me around planning 12 THE BUSINESS EXCHANGE 2016 ahead and setting objectives for the business and individuals. And, whilst our company ethos was clear to me I wasn’t sure that I had communicated all of it to the team. Now our company ethos is on a poster on the wall and our company vision and business plan is on the noticeboard so that everyone knows what is expected and what we plan to achieve together.” Achieving the Investors in People standard across 39 criteria indicates a business which is a great employer and outperforming place to work. The investors in People assessor said: “If the essence of “family togetherness” in a work environment could be bottled, then this is exactly the aroma that you would sense as you talk to and get to know the people who work at Sandra Silk Bookkeeping and Business Services. There is a strong sense of being professional and delivering a high quality service whilst at the same time caring for customers as well as one another.” Don’t bury your head in the sand! Pension Auto Enrolment is here to stay! Would you like a simple cost effective solution? Would you like peace of mind and no fines? Contact [email protected] and you won’t have to think about it again. 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