Leasing a car- LLP- private/business usage

Leasing a car- LLP- private/business usage

Author
Discussion

olly755

Original Poster:

3,070 posts

161 months

Monday 21st January 2019
quotequote all
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?

silentbrown

8,793 posts

115 months

Monday 21st January 2019
quotequote all
Commuting counts as private use, surely?

I think as soon as there's *any* private use (or even if it's just available for private use), you're paying BIK.

Get the lease personally and charge the company a mileage rate for business use?




Junior Bianno

1,400 posts

192 months

Monday 21st January 2019
quotequote all
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

olly755

Original Poster:

3,070 posts

161 months

Tuesday 22nd January 2019
quotequote all
Thanks for the replies. Happy to be corrected, but I thought company car tax and BIK did not apply to (genuine) limited liability partnerships?

silentbrown

8,793 posts

115 months

Tuesday 22nd January 2019
quotequote all
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

121,788 posts

264 months

Tuesday 22nd January 2019
quotequote all
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?

olly755

Original Poster:

3,070 posts

161 months

Tuesday 22nd January 2019
quotequote all
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

Eric Mc

121,788 posts

264 months

Tuesday 22nd January 2019
quotequote all
So not under PAYE.

That means that this car would not be treated under the PAYE Benefit in Kind rules. Is the lease in the name of the individual or the partnership?

olly755

Original Poster:

3,070 posts

161 months

Tuesday 22nd January 2019
quotequote all
We'd put it under the name of the partnership.

Eric Mc

121,788 posts

264 months

Tuesday 22nd January 2019
quotequote all
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.