Restoring a classic car through my business

[C Lee Farquar]

Yes, I will ask my accountant but some real world feedback would be appreciated first.

I am a sole trader with a 1988 Alfa Romeo that needs restoration.

Is it possible to nominate it as a company car and put the restoration expenses through the business? I wouldn't want to sell the car so I'm not worried about any capital gains issues.

It would make the restoration more attractive if I could reclaim the VAT and offset the expenditure against tax.

Thanks

[C Lee Farquar]

Simpo Two said:

If you're a sole trader can you have a 'company car'? There is no company. For me as a sole trader my car was a 'private car used for business' and you were allowed one car; didn't seem to matter what it was. IIRC it was depreciated over four years. A percentage of all related costs was allowable for business.

As far as I'm aware I can have a company car, there is a business if not a registered company.

I've never purchased a car through the business, just commercial vehicles. For newer cars it didn't seem cost effective to run them through the business, but I think it may be more attractive for older vehicles.

I was thinking of an Alfa 75 that I've had for a while but I have since had a better look underneath. I don't think restoration is viable.

I do have a couple of old Land Rovers that may suit better.

[C Lee Farquar]

SillyALFALove said:

No, you can’t have it as a “company “ car, there is no company I.E ltd co. There’s a business yes, no doubt but that’s not legally a company.

My reflections from previous sole trading before turning ltd is you would be able to reclaim mileage at 45p mile for documented business miles or if for some reason you can’t record accurately there is another methodology for allocating costs but realistically you can record accurately.

I don't believe a sole trader can do this if VAT registered.

[C Lee Farquar]

Thanks Eric for your comprehensive reply.

Thinking on this some more, my wife works for me full time. I'm wondering whether it might make sense for her to have the classic car as her company car, the tax implications seem low if it's worth under £15k. Presumably all maintenance and repair would then be a 100% business expense?

[C Lee Farquar]

Simpo Two said:

OP, please read what Eric said. He has described - in proper detail - what I said at the outset.

You do not have a company - let it go!

I didn't pay much attention to what you wrote as it contradicted what's on the HMRC website.

[C Lee Farquar]

Eric Mc said:

Sole traders CAN have a "Company Car" (taxable under PAYE through the Benefit in Kind system) IF the car is for the use of an EMPLOYEE.

Thank you Eric, that directly answers my question.

PM replied to.

[C Lee Farquar]

Thank you Eric for the informative phone call yesterday, much appreciated.

I'm left with the opinion if I wanted to run/repair a classic car through my business then giving it my wife as a company car, with her paying the benefit in kind through her PAYE. This works the same whether a sole trader with employees or a limited business.

However I've looked at the car I was considering and it's beyond economic repair so I'm now considering an early Land Rover.

It seems this will be more straightforward being a commercial vehicle.

There are additional aspects, such as percentage of private use, and I've based this post on my particular situation.