Hi all.

Long time since I last posted, hope everyone is well!

Anyway, i'm hoping to start my own business up in the new year and have a question regarding cars.

Basically, what is the best option financially for buying a new car to use for business purposes? Should I:

a) Buy outright.
b) Finance.
c) Lease.

How does each option relate to taxes, etc? If anyone knows any good links for more information to help me out, that would be great.

BTW, had a demo of the Lexus is250 on Monday, loved it!

Lee.

 

Lee

Unless you are doing a high milage the tax on a company car is very high from what I remember.

(On a company bike you pay feck all tax)

 

may depend on your status as self-employed

ie sole trader or limited company

 

Lee,

Tax man can be very snify about this. assuming you are a sole trader (much the same for director of ltd company though) here is my advice.

Buy the car yourself as own car then use it for company business.

Tax man will need to see evidence of business miles as %age of total miles each year so you must keep a good record.

Now here is the good bit:

Don't be pushed into the 40p per busines mile claim by the tax man do the following:

Calculate the ratio of busines miles as % of total miles each year.

Claim tax relief on all motoring bills using this ratio including all servicing / tyres/ petrol, oil, car tax and insurance.

So if business miles are 60% of total miles then you can set 60% of the running cost of the car off against tax.

Even better bit for the self employed or those require to supply their own car for work.

Using the ratio calculated above you can claim capital depreciation as well.
It works like this:

Is car worth more than

 

Great explanation aldfort .

Suddenly everything my accountant has told me has just fallen into place as thats exactly what he does for me and wifey , both sole traders.

 

Have a look at some of the leaflets ("informs") here in the library section:

www.chiene.co.uk

Most larger accounting firms do similar things and they are useful free source of info.

 

Sounds very complicated to me, and I think it would cost me more than just claiming the 40/25p per mile personal allowance.

 

I know what you mean. There's all these ways of saving or making money but it's the time and effort versus the saving.
I've just gone with car insurance through smartcover 'cos it was the lowest quote on confused.com. Other years I've spent evening after evening on the phone going through the same details. And this year I've just lost the will to live.
See also credit card surfing, and numerous other things.

As a company employee rather than self employed those benefits look tasty but I bet I'm not eligible, just have to stick to the 40/25p per mile.

 

As an employee it depends how much you use the car for business.

Most companies will put the block on you using your car for anything more than a local journey. After that it becomes cheaper for the company to hire a car for you and pay the hire costs.

One thing to note if you do a fair amount of business miles in your own personal car (owned by you) and your company does not pay for these at the government approved rate of 40p. You can, if you keep records, claim the difference in tax relief. So if you are entitled to 40p / mile and your firm pays 20p you can claim 20p in tax relief for every business mile you drive. Worth a few bob even if you do only 1000 miles per year it would be

 

Lee

Get along to the next Herts meet dude, would be good to see you guys