Leasing a car- LLP- private/business usage
Discussion
We run a well established LLP business, two partners (me and OH), VAT registered.
I've never leased a car, and am currently looking at putting a lease car through the business, emissions less that 120g/km. As I understand, if the vehicle used solely for business, the lease costs incurred go straight through the books, plus we can reclaim half of the VAT back, plus expenses like fuel etc. No BIK is applicable.
But there will be a proportion of private use. In terms of work, we would be visiting clients and jobs on site, commuting, accountant runs, procurement, etc. But there will be an honest element of private usage. Collecting kids from school, popping to supermarket etc. For the sake of argument, a 50/50 split.
The question is, as there is a split, can we put the full lease payment through the books, or seeing as it is 50/50, just half of the payments?
I've never leased a car, and am currently looking at putting a lease car through the business, emissions less that 120g/km. As I understand, if the vehicle used solely for business, the lease costs incurred go straight through the books, plus we can reclaim half of the VAT back, plus expenses like fuel etc. No BIK is applicable.
But there will be a proportion of private use. In terms of work, we would be visiting clients and jobs on site, commuting, accountant runs, procurement, etc. But there will be an honest element of private usage. Collecting kids from school, popping to supermarket etc. For the sake of argument, a 50/50 split.
The question is, as there is a split, can we put the full lease payment through the books, or seeing as it is 50/50, just half of the payments?
You put the full lease payment through the books. If there is personal use BiK is payable by the employee - you I assume. The amount of personal use if irrelevant. If it's a lease, you can claim back 50% of the VAT. The company pays Class 1A NICS on the benefit the employee receives. I'm not an accountant, but that's my understanding of how our lease cars work.
Can be very expensive. It may well be cheaper to do it personally and charge back mileage as suggested
Can be very expensive. It may well be cheaper to do it personally and charge back mileage as suggested
olly755 said:
...I thought company car tax and BIK did not apply to (genuine) limited liability partnerships?
Doh. Yes, I think that's right. I think Eric Mc is the relevant guru on this, but I believe you need to keep mileage records of business vs personal use, and then only offset the relevant portion against profits. So
Presumably if only 25% use is business, you can only reclaim vat on 25% of the costs...
Eric Mc said:
How are you normally remunerated through the LLP i.e. do you draw a salary which is taxed under PAYE or do you take a share of partnership profits?
We take an equal 50/50 share of the partnership profits (two partners), and pay the appropriate tax based on the annual profit of the business.Edited by olly755 on Tuesday 22 January 16:03
It would then be a business asset but being leased, would not normally be eligible for business capital allowances. Also, the costs that are allowable would have to be restricted by a private usage percentage - so the running costs and leasing charges would not be fully offsetable against the partnership profits.
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