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I'm self-employed, through the classic IT contractor route of a ltd company of which I'm the director and shareholder.
Currently, I have a private vehicle and am able to claim a mileage allowance from the company for journeys to client sites.
However, that private vehicle is a campervan, and I don't really want to be racking up a lot of miles on it (plus it's a bit of a PITA to drive everyday TBH).
So, my vague, just had, not-really-thought-about-it-proplerly idea is to buy a little car through the company and pay for all it's fuel and upkeep through the company. I would do no private journeys in it, just business journeys that would have otherwise have been eligible for a mileage claim.
Good idea? Bad idea?
Get a motorbike, and you can charge all costs with no personal tax issues - a car you can't.
It's my understanding that it's generally not worth it. Benefit in kind and all that, especially as you are the director of a one-man Ltd.
Speak to your accountant.
I didn't think benefit in kind applied as there's no personal use (i.e. benefit)
But, yeah, a question for the accountant
it being a campervan would count against you in this instance.
if it were a commercial van, then you'd pay BiK on a flat £3k, but as it is, you'll pay BiK just like you would on a car (which in most cases works out more expensive than owning it privately)
oops, just re-read it... you're talking about getting new car, rather than making the campervan a company vehicle.
my bad 🙂
The campervan's got nothing to do with it, I won't be using it.
I'm talking about buying another little car (or little van I suppose) that's cheap to run, through the company, and using it solely for business use.
[edit] yep 🙂
I didn't think benefit in kind applied as there's no personal use (i.e. benefit)
I've always found ContractorUK good for this sort of stuff (all the tax nonsense was a strong motivator in my decision to give up contracting)
[i]
There is no quick answer other than to say that while tax traditionally dictates the choice you will make, there are other factors to consider.
These factors are those that make a real difference, namely: affordability, type of company car and the envisaged proportion of both business and personal driving.
You should initially work out the total costs of privately running the vehicle. This would include financing the purchase, maintenance, insurance, tax and depreciation.
Secondly, calculate how much your employer would reimburse for business mileage, additional to the value of any cash offered to you as an alternative to the company car.
Then, compare that with the tax on the benefit, which is based on the vehicle’s list price and its emissions rating.
You also need to consider fuel. With company-paid petrol, the tax charge will be irrespective of the private mileage you accumulate. The HMRC rules say this is based on a fixed amount of £20,200 multiplied by the emissions figure as a percentage.
Finally, compare that with the amount of fuel you would have to buy for private journeys. In this sense, company cars can still represent a perk as if you are a 40% taxpayer, the tax alone might fund about 10,000 miles worth of fuel.
However generally-speaking, what was once a valuable perk should now be considered only in certain circumstances.
The expert was Jon Sutcliffe, partner at Kingston Smith LLP, a chartered accountancy firm.
Wednesday 21st November 2012[/i]
http://www.contractoruk.com/limited_companies/does_company_car_beat_owning_it_privately.html