Tax relief on vehicle

[mrkjd]

I am a contractor sole trader self assessing and it's time to replace my current vehicle.

The simplest way to do it is to just claim milage @45p a mile but unfortunately I don't business use the car much milage-wise (maybe 3k per annum) as my core work is overseas where a vehicle is provided.

I do however believe I use the car for, say 20% business use overall (drop-offs, business errands, meetings ) as I average 15k a year.

I know BIK etc does not apply as there is no separation between myself and my business and VAT is not a factor.

So if I got a £25k low emissions car for cash (new or second hand) wouldn't I be better off claiming actual costs of 5k (20% cost) plus associated road tax / insurance / services etc? Or do I just get tax relief off the 5k whilst the 45p a mile is fully allowed? To date I have just been claiming the milage rate on the old car but I'm finding it difficult to weigh up the pros\cons when considering replacement. Has anybody been in a similar position?

[CryingSheep]

I am a contractor sole trader self assessing and it's time to replace my current vehicle.

The simplest way to do it is to just claim milage @45p a mile but unfortunately I don't business use the car much milage-wise (maybe 3k per annum) as my core work is overseas where a vehicle is provided.

I do however believe I use the car for, say 20% business use overall (drop-offs, business errands, meetings ) as I average 15k a year.

I know BIK etc does not apply as there is no separation between myself and my business and VAT is not a factor.

So if I got a £25k low emissions car for cash (new or second hand) wouldn't I be better off claiming actual costs of 5k (20% cost) plus associated road tax / insurance / services etc? Or do I just get tax relief off the 5k whilst the 45p a mile is fully allowed? To date I have just been claiming the milage rate on the old car but I'm finding it difficult to weigh up the pros\cons when considering replacement. Has anybody been in a similar position?

Yes! Keep going with the mileage rate...

[northernladuk]

The simplest way to do it is to just claim milage @45p a mile but unfortunately I don't business use the car much milage-wise (maybe 3k per annum) as my core work is overseas where a vehicle is provided.

And in the above is your answer.....

I do however believe I use the car for, say 20% business use overall (drop-offs, business errands, meetings ) as I average 15k a year.

These are very low figures. 250 miles a month. That's absolute peanuts to most and hardly warrants a business vehicle really.

I know BIK etc does not apply as there is no separation between myself and my business and VAT is not a factor.

So if I got a £25k low emissions car for cash (new or second hand) wouldn't I be better off claiming actual costs of 5k (20% cost) plus associated road tax / insurance / services etc? Or do I just get tax relief off the 5k whilst the 45p a mile is fully allowed? To date I have just been claiming the milage rate on the old car but I'm finding it difficult to weigh up the pros\cons when considering replacement. Has anybody been in a similar position?

I think you've got a lot wrong in the above so first thing I would do is go ask your accountant for a full break down of costs, BiK and so on. They should be able to give you an illustration of what it will cost/save. I'm almost sure it won't be worth it. It's vary rare that buying a car through the business is worthwhile, particularly with these tiny numbers.

Sounds like you are going to spend more time working this out than you do driving business miles in a year to me.

[craigy1874]

You need to do the sums.

You have 3,000 miles x 45p = £1,350.

Now take all costs relating to the car, and claim 20% of these and then compare to the figure of £1,350.

Don't forget to claim an 8% or 28% capital allowance on the cost of the car and then take 20% of that too.

[CryingSheep]

You need to do the sums.

You have 3,000 miles x 45p = £1,350.

Now take all costs relating to the car, and claim 20% of these and then compare to the figure of £1,350.

Don't forget to claim an 8% or 28% capital allowance on the cost of the car and then take 20% of that too.

Not that simple... when you sell the car in the future you have to consider part of it as an inflow to your ltd.