Car tax question
Discussion
I run some car events, and as such, strangely enough I need a car. Right now i run a banger of an old R827, however, one day it'll pass away and I'll have to get something newer.
Considering I need the car purely for the events do I still pay tax in kind on the car itself? Its not like I have a choice in having the car as I can't exactly run the events on public transport. Also, its not my sole car either - i have a seperate car that i use for purely personal use.
Before Eric berates me for not asking my accountant - I'm not due to see him for sometime yet and this is purely hypothetical at the moment
Considering I need the car purely for the events do I still pay tax in kind on the car itself? Its not like I have a choice in having the car as I can't exactly run the events on public transport. Also, its not my sole car either - i have a seperate car that i use for purely personal use.
Before Eric berates me for not asking my accountant - I'm not due to see him for sometime yet and this is purely hypothetical at the moment
OK.
When a car is owned by a limited company and the car is made available to a director of the company for non-business as well as biusiness use, it will be necessary to apply the car Benefit in Kind tax rules for that vehicle. This will result in the director having to pay additional PAYE and Class 1 National Insurance over and above what they would have suffered on their salary alone.
The company will be able to offset the vehicle running costs and the Capital Allowances against its business profits for tax purposes, but some of these claims will be restricted purely because we are talking aboyut a "Motor Car". The tax treatment of "Vans", for instance, is not as restrictive.
The comapny will also be able to claim back VAT on the running costs of the car (but NOT on the purchase cost). If the company bought a van, it COULD claim back the VAT on the cost of the van.
This is just a very brief overview of the situation. You should discuss your plans with your accountant to see what the best course of action should be.
When a car is owned by a limited company and the car is made available to a director of the company for non-business as well as biusiness use, it will be necessary to apply the car Benefit in Kind tax rules for that vehicle. This will result in the director having to pay additional PAYE and Class 1 National Insurance over and above what they would have suffered on their salary alone.
The company will be able to offset the vehicle running costs and the Capital Allowances against its business profits for tax purposes, but some of these claims will be restricted purely because we are talking aboyut a "Motor Car". The tax treatment of "Vans", for instance, is not as restrictive.
The comapny will also be able to claim back VAT on the running costs of the car (but NOT on the purchase cost). If the company bought a van, it COULD claim back the VAT on the cost of the van.
This is just a very brief overview of the situation. You should discuss your plans with your accountant to see what the best course of action should be.
Just out of interest - what's the difference between having a company car with declared named drivers, and a "pool" company car? My father's place of work have all their cars declared as pool cars, and apparently there's some sort of tax benefit? Although it does mean that if they use the cars for non-work purposes, they have to pay the company for the privilege.
A pool car is one that is NOT available to employees or directors for non-business useage. If a car is made available for private useage then it is not really a pool car.
This does not mean that a pool car cannot be used occasionaly for non-business journeys. But allowing an employee to drive the same vehicle habitually or drive it home and park it there overnight as "normal" would go a long way to torpedo anyone's claim that the car was a genuine "pool" car.
In my experience, very few businesses (such as car dealers or lessors) can support a "pool" car claim unless the business tends to have vehicles as part of their "stock in trade" - rather than normal fixed asssets. Ordinary businesses MIGHT get away with designating ONE car in the fleet of company cars as THE pool car, available to office staff for designated work related journeys and kept overnight at the business premises.
Also, if an employment contract states that the deal for the employee includes the use of a car, that would also negate any claims that such a car was a "pool" car.
This does not mean that a pool car cannot be used occasionaly for non-business journeys. But allowing an employee to drive the same vehicle habitually or drive it home and park it there overnight as "normal" would go a long way to torpedo anyone's claim that the car was a genuine "pool" car.
In my experience, very few businesses (such as car dealers or lessors) can support a "pool" car claim unless the business tends to have vehicles as part of their "stock in trade" - rather than normal fixed asssets. Ordinary businesses MIGHT get away with designating ONE car in the fleet of company cars as THE pool car, available to office staff for designated work related journeys and kept overnight at the business premises.
Also, if an employment contract states that the deal for the employee includes the use of a car, that would also negate any claims that such a car was a "pool" car.
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