Sole traders: How do you run your cars?
Discussion
This is how i do it: add up all my vehicle expenses, split them accodring to milage (car is also used for personal). on my Tax return i claim the business side of the split as an expense.
Anything i'm missing out on anything here?
Can the cost of the vehicle be an expense?
Thanks Chaps.
Rick.
Anything i'm missing out on anything here?
Can the cost of the vehicle be an expense?
Thanks Chaps.
Rick.
jon- said:
I might be way off the mark here, but if it's financed and say 50% of your mileage is claimed as business, can't 50% of the finance agreement?
yeah, thats kind of why i'm asking, I own my car, so more of my income gets taxed as it's not going on a lease deal or whatever.
Soooo...if i leased something I'd pay less tax right?
if you use your car for say 75% business use and 25% personal use and the lease is £200 pcm, then only £150 of the payment would be deductable for tax purposes.
If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
smartie said:
if you use your car for say 75% business use and 25% personal use and the lease is £200 pcm, then only £150 of the payment would be deductable for tax purposes.
If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
thanks,If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
I get it now,
if i was paying a loan for my car, could claim part of the payment as a business expense?
Scho said:
smartie said:
if you use your car for say 75% business use and 25% personal use and the lease is £200 pcm, then only £150 of the payment would be deductable for tax purposes.
If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
thanks,If the car is considered expensive (as with owned cars the level is £12K) then a deduction is made to the lease payment to reflect this when calculating the tax deduction, to broadly bring it in line with the £12K limit. There is a specific formula to calculate this which you'll find if you trawl the HMRC website - I cant remember it exactly off hand.
I get it now,
if i was paying a loan for my car, could claim part of the payment as a business expense?
sebo said:
I think all Car Leasing costs are tax-deductable.
Depends on the nature if the lease.If an "Operational" lease (i.e a straightforward rental arrangement) then the monthly/quarterly repayments are allowed as straight deductions against profit - subject to amy private useage or expensive car restrictions.
If a "finance" lease, then the only part of the leasing cost that can be reclaimed against taxable profits is that part of the lease payment relating to the finance charge. In addition, under finance leases, the business is not entitled to any capital allowances on the vehicle (these are being claimed by then leasing company). Instead, the business will claim the accounting "depreciation" on the vehicle. This is the only circumstanbce where HMRC allows accounting depreciation as a tax deductable cost.
From this tax year forward.
If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
wargriff said:
From this tax year forward.
If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
Is the 10% CA regardless of CO2 rating unless it qualifies for 100%?If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
Eric Mc said:
I presume the different tax treatments of "Operational" leases and "Finance" leases remains?
From the visit we had with the tax people, they have the same treatment. They have stated the amount allowed to be allocated against tax is a blanket 85% if above 160 co2.Will check again to confirm.
smartie said:
wargriff said:
From this tax year forward.
If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
Is the 10% CA regardless of CO2 rating unless it qualifies for 100%?If purchased, via cash or a HP contract.
You have a 10% write down allowance to go against the profit of your business.
On disposal you no longer have the balancing charge, instead the loss is put into a seperate pot, of which 10% annually is offset against profit.
If Leased/Contract Hired
Depending on the Co2 output. If below 160 it is 100% of rental aginst profits. If above 160 it is 85%. 50% of VAT on rental is also claimable in your VAT return.
The old system of expensive car disallowance has now stopped for new contracts.
HTH
wargriff said:
Eric Mc said:
I presume the different tax treatments of "Operational" leases and "Finance" leases remains?
From the visit we had with the tax people, they have the same treatment. They have stated the amount allowed to be allocated against tax is a blanket 85% if above 160 co2.Will check again to confirm.
Obviously, that means that the business which is leasing the asset cannot claim any Cpaital Allowances on those leased assets.
Eric Mc said:
wargriff said:
Eric Mc said:
I presume the different tax treatments of "Operational" leases and "Finance" leases remains?
From the visit we had with the tax people, they have the same treatment. They have stated the amount allowed to be allocated against tax is a blanket 85% if above 160 co2.Will check again to confirm.
Obviously, that means that the business which is leasing the asset cannot claim any Cpaital Allowances on those leased assets.
The capital allowance is only on the purchase contracts ie lease purchase or hire purchase.
The major difference now is the level of capital allowance. The previous figure of 25% > £12,000 has now changed to 10%. The expensive car disallowance (half the excess rule) is no longer in place.
And the balancing charge has also been removed for the sale of the asset.
So the point I was making is correct - those on Finance Leases cannot claim any Capital Allowances at all and must just claim a combination of the Finance Charge element of the lease payments and the normal accounting depreciation?
I can't see how this could be operated any other other way without causing massive problems.
I can't see how this could be operated any other other way without causing massive problems.
Eric Mc said:
So the point I was making is correct - those on Finance Leases cannot claim any Capital Allowances at all and must just claim a combination of the Finance Charge element of the lease payments and the normal accounting depreciation?
I can't see how this could be operated any other other way without causing massive problems.
I think we are singing from the same song sheet, where we differ is in the terms used. The offsetable figures for lease/contract hire of cars is 85% or 100%. Depending on Co2 output. I can't see how this could be operated any other other way without causing massive problems.
The use of the capital allowance term is where we find complications when talking to customers. As this assumes ownership. The offset figure is 85% of rental for Co2 > 160. There is no accounting depreciation charge that I am aware of. It is just a cost to company. On sale to third party, if on lease, there is a rebate of rentals.
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