One disadvantage of leasing is that you have a fixed end date when you need to replace the car. When you buy a car, you have flexibility as to when you replace it. 😎
Excellent video, although after entering my email address on your website, the spreadsheet was not emailed to me. Is there another way of receiving it?
Good video, but at the moment by looking around a bit. You can get a PCH or BCH at a much lower cost for 36 months, also if anyone had a company car scheme, that would be the cheapest option as you only pay for personal miles.
Very helpful video and thanks for sharing your spreadsheet. I am also looking to do via a ltd company. i notice you have used employee BiK, should employer BiK (13.8%) also be added in calcs?
nice one Rick. I just ordered one on BCH. Purely cause i want to change the car in a couple of years and this had the cheapest monthly option for me at £439 a month excl VAT - for the longe range AWD
No idea if this helped at all but it was interesting. I’m not a business owner so this doesn’t really apply to me. However, I was thinking of going with PCH as the monthly payments were cheaper. I plan on trading in my car, so this helps bringing the costs down. That being said, the PCP option was about £100 more a month, so I went with that option as I liked that I could possibly trade in my Tesla after 4 years to get some money. Otherwise (with the PCH) I’d essentially be trading in my car to rent a Tesla which I’d then have to give back and be left with nothing. My rationale is probably completely off, but I feel like I chose the best option in my eyes.
In my opinion there are too many risks with any situation that is not a cash purchase. IE : unforeseen personal circumstances force you into a stressful situation which means you are unable to fulfil contract, loss of job, health problems etc… it’s not just about the numbers. It’s about do I want a companies hand in my pocket or do I want control even if I can afford payments. Also do I want to be restricted as to mileage I can do or do I want the freedom to chose for myself. Do I want to pay thousands in interest on top of the purchase price at the same time it’s depreciating in value? Personally, just pay cash. It’s always the best way. It’s then yours to do what you want with. This is my opinion only.
An important part of the Tesla experience is being able to purchase the FSD or boost upgrades after receiving the car. Prospective Leaser's BEWARE I have leased a Model 3 Long Range and have been told by LEX AUTOLEASE that I am not allowed to upgrade the car in any way. They dont tell you this before signing on the dotted line.
Hi Tony, you're absolutely right, it's the same with ALD Automotive. I didn't realise this until some time after recording this video. If buying the acceleration boost or FSD is important to you then leasing may not be for you.
Great video, totally agree with your views.I think the market will move on in 3 years and the amount saved on a purchase is not enough in my opinion to de-risk a loss.
Looking at this also for a PHEV option. Great video, one question. When leasing, the capital allowance cannot be applied if the intention is not ownership. Is that right? So can we still take off the 19% allowance as you have in the example? Thanks!
What do you think about Hire purchase vs the lease? Considering you would be able to claim the full cost back in year one from corp tax (25% corp tax payer) so this would reduce my initial corporation tax bill by 10k and then payments can be spread over time?
So, as a LTD owner, it still works out better to go with business contract hire for the 3 years due to the savings to be had via tax etc? **I should add that I meant the investment option isn’t an option for myself The option to buy out right seems like a good choice at 1st but in 3 years I want to upgrade my car, again (coming from another car to the Model Y) 😊
Yes in my opinion. You can use the spreadsheet as a starter for your own research. Also worth checking out the salary sacrifice option as per one of the comments on this video.
Did you consider the risk of inflation? If you buy a vehicle and inflation turns out higher than forecast, the trade-in value of the car will be higher, possibly substantially higher.
Great approach, thanks Rich! I love how you're investing in the company + using a lease to perhaps buy one outright...smart + just subscribed. Re: Supercharger miles, the link goes to a USD page with accessories. Not sure we can use it and there's other options? Would you do a new series/channel on investing?
Thanks 🙏 Yeah, they discontinued the referral scheme a few months ago sadly. I do have a series tracking my investment in TSLA each quarter - just click on my videos to see the latest which is 9 months in 🙂
Great video, thank you for taking the time to put it together! I've been doing some research and feel the resale value should be nearer to 70% than 58% - if that were the case (and i appreciate that's a huge if) how would I add the resale value back in to PCP in your spreadsheet? It would obviously be considered selling an asset for the business and tax would have to be paid on the gains, no?
Great Video Rick. Thank you. I see you are also able to finance via Hp now. Is this something I should consider or compare to your 3 finance types ? Thanks again.
Thanks Rick, great and informative video. If I bought the car outright via my LTD company, would I have to keep paying BIK for every year of ownership?
You have not included "Salary sacrifice" which mean lease payment comes out of gross pay, so you save an amount each month based on your tax rate. In my case it was extremely advantageous as I have that "happy" total nominal tax rate of 62.5% due to the the loss of personal allowance - so my total payback is much less than these numbers you are quoting.
So presumably that's a personal lease plan rather than business contract hire. I guess it depends on each individual's circumstances as most one-man LTD companies pay themselves a very low salary through PAYE and take the rest as dividends but I'm guessing you'd need to up your base salary to cover the salary sacrifice which would have tax implications too.
@@rickontesla No, this is a UK incentive scheme open to any company and any person; you just need to be on PAYE, and they deduct the lease payment from your gross salary. The point is that BIK is very low on EV's, and for the first year I paid no BIK, and got 62% off my lease bill
@@rickontesla Hope I get this correct from the table... Prices covers 15K miles/year + all service costs (none) + all tires: for a Model-3 LR , blue, aero wheels, black interior. No upfront cost, no end of lease cost (basically underwritten by company), you hand it back Basic rental/month £699.70.month for 36 months. Rental/month includes the disallowed VAT : £765.24 for 36 months. BIK 2020/21 : 0% 2021/22 1% : 2022/23 : 2% (£0, £209.96, £419.92) Effective PAYE cost to employee paying 40% tax for the 3 years : £443.84, £461.34, £478.83 I don't have the exact numbers for me (62.5% effective tax rate - look it up), but it is about £300/month for me.
If my company buys the car and I pay benefit in kind tax etc and the company NI on this (because I will use the for some private use), does anyone know if I can still claim 45p a mile on business use?
Sorry for late reply, yes I bought shares via my LTD company through Interactive Brokers - pretty much followed this guide - www.foxymonkey.com/how-to-invest-your-company-profits/
@@rickontesla This is an interesting concept. Definitely a good time to be averaging into shares. Are you paying tax on your gainse and were these taxes deducted from your stock market gains so it was a through comparison between Shares and vehicle ?
@@augustvfx3436 I haven't sold any of the shares as yet. Plan is to hold for at least 3 years. If I do need to sell, then I'd do it in small chunks to avoid big tax bills.
thanks for this, Saved me making the spreadsheet for myself which i was about to do. But you should have a donation link I'd happily drop a few pounds for saving me a few hours of effort I would just say though, In computer programming, its better to use variables which you definine at the start. ie in excel that means setting variables such as tax rate, corporation tax rate, etc etc right at the start so that its all fully changable.
The spreadsheet took a long time to put together and it wasn't really intended to see the light of day but I figured it'd be useful for others in a similar position. However, I couldn't bring myself to go back through it and change everything into variables 🤣
When you say "invest into tesla for 3 years", do you mean investing the cash in your business into its shares? And then doesn't profit also get taxed each year?
Personally, I have a separate LTD for investing so I loan the money from the cash generating LTD to the investment LTD. So, I've invested just over £50k in Tesla (TSLA) shares and have leased my Model 3 instead ... you only have tax to declare when you sell at a profit and my plan is to hold for 3 years minimum and then drip feed any profits out as and when needed. At the time of writing the shares are doing good and currently the profit would cover the costs of half of the 3 year lease - www.rickontesla.com/shares-tracker
@@rickontesla Good call. I also invested in TSLA 3 years ago but im only just getting around to purchasing a Tesla vehicle. I'm still unsure how to finance it. Lease seems a clean option that allows you to chop and change vehicles as the technology develops. In terms of tying up money in the vehicles (PCP etc) you will only ever really get that back when you finally dont need a car at all. But the flipside is its feels like lease is putting the money down the drain. help !
@@augustvfx3436 yeah, there's no perfect solution unfortunately. For me, I'll likely continue to lease and change cars every few years as the EV era picks up pace.
Question please if you could answer asap Say company corporation tax bill is say 10k based on 50k profit at 19% I buy a 50k tesla 2023 so therefore my profit is zero there no ct tax due 3 years later i sell the tesla for 35k Do I then owe hrmc 19% on the 15k deprecation or 19% on the full sales price? Thanks Josh
Great video and spreadsheet I've now received. One thing I have a question on was how you did the Business Contract at 8k miles - lowest I can seem to select on Tesla site is 10k Doubt it matters too much but I my mileage is usually well under 8k a year so potential savings :)
Thanks Kevin. You can't go lower than 10k mileage on the Tesla site but when you get into the order process you can get multiple quotes from ALD with varying mileage on it. I'm not sure if they have a minimum annual mileage but I got a quote at 8k so it's worth asking. Finally, they do credit unused miles which I discuss in this video -> ruclips.net/video/VVdzodE6jA0/видео.html
Personally, I have a separate LTD for investing so I loan the money from the cash generating LTD to the investment LTD. So, I've invested just over £50k in Tesla (TSLA) shares and have leased my Model 3 instead ... you only have tax to declare when you sell at a profit and my plan is to hold for 3 years minimum and then drip feed any profits out as and when needed. At the time of writing, the increase in the TSLA share price has more than paid for my entire lease so I'm glad I went down this "financing option". I use Interactive Brokers myself, here's a good article on investing UK LTD profits - www.foxymonkey.com/how-to-invest-your-company-profits/
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One disadvantage of leasing is that you have a fixed end date when you need to replace the car. When you buy a car, you have flexibility as to when you replace it. 😎
Also if circumstances change and you need to exit the contract early, you have to pay the early termination fee
Thank you, but no background music next time please
Noted
Very detailed video into the UK tax position and costs. I have downloaded your sheet and passed this video link onto my friends! Thank you Rick!!!
That's great to hear ... makes all the effort worth it to know it's helping others. Thanks for sharing!
Excellent video, although after entering my email address on your website, the spreadsheet was not emailed to me. Is there another way of receiving it?
Good video, but at the moment by looking around a bit. You can get a PCH or BCH at a much lower cost for 36 months, also if anyone had a company car scheme, that would be the cheapest option as you only pay for personal miles.
Thank you so much. I am thinking about buying a Tesla next month so this has definitely given me food for thought.
Very helpful video and thanks for sharing your spreadsheet. I am also looking to do via a ltd company. i notice you have used employee BiK, should employer BiK (13.8%) also be added in calcs?
Possibly, best to feed your accountant the spreadsheet and see what they make of it.
nice one Rick. I just ordered one on BCH. Purely cause i want to change the car in a couple of years and this had the cheapest monthly option for me at £439 a month excl VAT - for the longe range AWD
Interesting. Great price. How much deposit did you end up paying if you don't mind me asking?
@@SeaJayBelfast around £2.7k excl VAT
Tesla shareholder here too, i alsp think its definitely a better investment of your money!
It's looking pretty good so far 🤞
@@rickontesla I wish I had 50k to put in tesla too 🤣
I'm like 20% in profits atm
No idea if this helped at all but it was interesting. I’m not a business owner so this doesn’t really apply to me. However, I was thinking of going with PCH as the monthly payments were cheaper. I plan on trading in my car, so this helps bringing the costs down. That being said, the PCP option was about £100 more a month, so I went with that option as I liked that I could possibly trade in my Tesla after 4 years to get some money. Otherwise (with the PCH) I’d essentially be trading in my car to rent a Tesla which I’d then have to give back and be left with nothing. My rationale is probably completely off, but I feel like I chose the best option in my eyes.
Fantastic vid. Very helpful. I’m purchasing through Ltd Co. Asked my CA and got some vague answer. Thanks again.
Glad it was helpful!
Brilliant work Rick
In my opinion there are too many risks with any situation that is not a cash purchase. IE : unforeseen personal circumstances force you into a stressful situation which means you are unable to fulfil contract, loss of job, health problems etc… it’s not just about the numbers. It’s about do I want a companies hand in my pocket or do I want control even if I can afford payments. Also do I want to be restricted as to mileage I can do or do I want the freedom to chose for myself. Do I want to pay thousands in interest on top of the purchase price at the same time it’s depreciating in value? Personally, just pay cash. It’s always the best way. It’s then yours to do what you want with. This is my opinion only.
An important part of the Tesla experience is being able to purchase the FSD or boost upgrades after receiving the car. Prospective Leaser's BEWARE I have leased a Model 3 Long Range and have been told by LEX AUTOLEASE that I am not allowed to upgrade the car in any way. They dont tell you this before signing on the dotted line.
Hi Tony, you're absolutely right, it's the same with ALD Automotive. I didn't realise this until some time after recording this video.
If buying the acceleration boost or FSD is important to you then leasing may not be for you.
Great video, totally agree with your views.I think the market will move on in 3 years and the amount saved on a purchase is not enough in my opinion to de-risk a loss.
Looking at this also for a PHEV option. Great video, one question. When leasing, the capital allowance cannot be applied if the intention is not ownership. Is that right? So can we still take off the 19% allowance as you have in the example? Thanks!
What do you think about Hire purchase vs the lease? Considering you would be able to claim the full cost back in year one from corp tax (25% corp tax payer) so this would reduce my initial corporation tax bill by 10k and then payments can be spread over time?
Bet you are happy you invested in Tesla!!
Hey Rick, any chance we can get a hold of that fabulous spreadsheet you have set up?
Sure, the link is in the description - rickontesla.com/blog/post/buying-a-tesla-vs-leasing-vs-pcp-through-a-uk-ltd-company
So, as a LTD owner, it still works out better to go with business contract hire for the 3 years due to the savings to be had via tax etc?
**I should add that I meant the investment option isn’t an option for myself
The option to buy out right seems like a good choice at 1st but in 3 years I want to upgrade my car, again (coming from another car to the Model Y) 😊
Yes in my opinion. You can use the spreadsheet as a starter for your own research.
Also worth checking out the salary sacrifice option as per one of the comments on this video.
Did you consider the risk of inflation? If you buy a vehicle and inflation turns out higher than forecast, the trade-in value of the car will be higher, possibly substantially higher.
What about Benefit in Kind?
Great approach, thanks Rich! I love how you're investing in the company + using a lease to perhaps buy one outright...smart + just subscribed.
Re: Supercharger miles, the link goes to a USD page with accessories. Not sure we can use it and there's other options?
Would you do a new series/channel on investing?
Thanks 🙏
Yeah, they discontinued the referral scheme a few months ago sadly.
I do have a series tracking my investment in TSLA each quarter - just click on my videos to see the latest which is 9 months in 🙂
Great video, thank you for taking the time to put it together! I've been doing some research and feel the resale value should be nearer to 70% than 58% - if that were the case (and i appreciate that's a huge if) how would I add the resale value back in to PCP in your spreadsheet?
It would obviously be considered selling an asset for the business and tax would have to be paid on the gains, no?
Thanks Chris. That sounds about right to me but you'd have to check with your accountant.
Great Video Rick. Thank you. I see you are also able to finance via Hp now. Is this something I should consider or compare to your 3 finance types ? Thanks again.
Sorry for the delayed reply, I'd recommend exploring all possibilities including salary sacrifice as mentioned by someone else in the comments.
Thanks Rick, great and informative video. If I bought the car outright via my LTD company, would I have to keep paying BIK for every year of ownership?
Yes, as far as I know, you pay BIK each year based on the Vehicle Value x BIK% = BIK cash value
@@rickontesla thank you for taking the time to reply! much appreciated!
I'd say this a great strategy!
You have not included "Salary sacrifice" which mean lease payment comes out of gross pay, so you save an amount each month based on your tax rate. In my case it was extremely advantageous as I have that "happy" total nominal tax rate of 62.5% due to the the loss of personal allowance - so my total payback is much less than these numbers you are quoting.
So presumably that's a personal lease plan rather than business contract hire.
I guess it depends on each individual's circumstances as most one-man LTD companies pay themselves a very low salary through PAYE and take the rest as dividends but I'm guessing you'd need to up your base salary to cover the salary sacrifice which would have tax implications too.
@@rickontesla No, this is a UK incentive scheme open to any company and any person; you just need to be on PAYE, and they deduct the lease payment from your gross salary. The point is that BIK is very low on EV's, and for the first year I paid no BIK, and got 62% off my lease bill
@@Tom55data sounds great, have you got a worked example you could share so we know what it ended up totalling over a 3 year period?
@@rickontesla Hope I get this correct from the table...
Prices covers 15K miles/year + all service costs (none) + all tires: for a Model-3 LR , blue, aero wheels, black interior.
No upfront cost, no end of lease cost (basically underwritten by company), you hand it back
Basic rental/month £699.70.month for 36 months.
Rental/month includes the disallowed VAT : £765.24 for 36 months.
BIK 2020/21 : 0% 2021/22 1% : 2022/23 : 2% (£0, £209.96, £419.92)
Effective PAYE cost to employee paying 40% tax for the 3 years : £443.84, £461.34, £478.83
I don't have the exact numbers for me (62.5% effective tax rate - look it up), but it is about £300/month for me.
@@Tom55data sounds great and well worth looking into for others who are yet to commit to a lease 👍
If my company buys the car and I pay benefit in kind tax etc and the company NI on this (because I will use the for some private use), does anyone know if I can still claim 45p a mile on business use?
Great vid, thanks. You have completely made my mind up that leasing is the way forward
Glad it was helpful!
Did you buy shares in the Limited company name? I know you cannot advise but do you know of share dealers who accept Ltd company share purchases?
Sorry for late reply, yes I bought shares via my LTD company through Interactive Brokers - pretty much followed this guide - www.foxymonkey.com/how-to-invest-your-company-profits/
@@rickontesla This is an interesting concept. Definitely a good time to be averaging into shares. Are you paying tax on your gainse and were these taxes deducted from your stock market gains so it was a through comparison between Shares and vehicle ?
@@augustvfx3436 I haven't sold any of the shares as yet. Plan is to hold for at least 3 years.
If I do need to sell, then I'd do it in small chunks to avoid big tax bills.
@@rickontesla Good call. I really like your idea of leasing and using your money instead to invest in TSLA stock.
thanks for this,
Saved me making the spreadsheet for myself which i was about to do.
But you should have a donation link I'd happily drop a few pounds for saving me a few hours of effort
I would just say though, In computer programming, its better to use variables which you definine at the start.
ie in excel that means setting variables such as tax rate, corporation tax rate, etc etc right at the start so that its all fully changable.
The spreadsheet took a long time to put together and it wasn't really intended to see the light of day but I figured it'd be useful for others in a similar position. However, I couldn't bring myself to go back through it and change everything into variables 🤣
When you say "invest into tesla for 3 years", do you mean investing the cash in your business into its shares? And then doesn't profit also get taxed each year?
Personally, I have a separate LTD for investing so I loan the money from the cash generating LTD to the investment LTD. So, I've invested just over £50k in Tesla (TSLA) shares and have leased my Model 3 instead ... you only have tax to declare when you sell at a profit and my plan is to hold for 3 years minimum and then drip feed any profits out as and when needed.
At the time of writing the shares are doing good and currently the profit would cover the costs of half of the 3 year lease - www.rickontesla.com/shares-tracker
@@rickontesla Good call. I also invested in TSLA 3 years ago but im only just getting around to purchasing a Tesla vehicle. I'm still unsure how to finance it. Lease seems a clean option that allows you to chop and change vehicles as the technology develops. In terms of tying up money in the vehicles (PCP etc) you will only ever really get that back when you finally dont need a car at all. But the flipside is its feels like lease is putting the money down the drain. help !
@@augustvfx3436 yeah, there's no perfect solution unfortunately. For me, I'll likely continue to lease and change cars every few years as the EV era picks up pace.
Question please if you could answer asap
Say company corporation tax bill is say 10k based on 50k profit at 19%
I buy a 50k tesla 2023 so therefore my profit is zero there no ct tax due
3 years later i sell the tesla for 35k
Do I then owe hrmc 19% on the 15k deprecation or 19% on the full sales price?
Thanks
Josh
One to check with your accountant, but I think you'd only owe on the £15k, but definitely check with your accountant
Great video and spreadsheet I've now received. One thing I have a question on was how you did the Business Contract at 8k miles - lowest I can seem to select on Tesla site is 10k
Doubt it matters too much but I my mileage is usually well under 8k a year so potential savings :)
Thanks Kevin.
You can't go lower than 10k mileage on the Tesla site but when you get into the order process you can get multiple quotes from ALD with varying mileage on it. I'm not sure if they have a minimum annual mileage but I got a quote at 8k so it's worth asking.
Finally, they do credit unused miles which I discuss in this video -> ruclips.net/video/VVdzodE6jA0/видео.html
Owning outright is always better
Hard to disagree with such a well thought out comment backed up with sound reasoning and logic 👏
@@rickontesla This made me chuckle.
Man makes a 16+ minute video, creates a comprehensive spreadsheet and makes several sound arguments.
Viewer: Yeah, but ur rong!!!!
@@SeaJayBelfast 🤣🤯🤣
Did you buy shares in the Limited company name? I know you cannot advise but do you know of share dealers who accept Ltd company share purchases?
Personally, I have a separate LTD for investing so I loan the money from the cash generating LTD to the investment LTD. So, I've invested just over £50k in Tesla (TSLA) shares and have leased my Model 3 instead ... you only have tax to declare when you sell at a profit and my plan is to hold for 3 years minimum and then drip feed any profits out as and when needed.
At the time of writing, the increase in the TSLA share price has more than paid for my entire lease so I'm glad I went down this "financing option".
I use Interactive Brokers myself, here's a good article on investing UK LTD profits - www.foxymonkey.com/how-to-invest-your-company-profits/