Contractors car leasing

[Dickvand]

I'm a one man ltd co contractor, after some advice regarding the best and legal way to purchase a car and claim business expenses through my Ltd co..

My accountant has advised me that the most tax efficient way is to:

purchase the car privately separate from the business.

Claim 45p per mile through the business from my registered business address (home in my case), to wherever the contact place of work is for first 10,000 miles and 25p thereafter

Create a lease agreement between myself and the Ltd Company, where I transfer a monthly lease amount from the business account to my personal account, so I am effectively leasing the car to the company, but the car remains in my personal ownership, rather than business ownership.

The monthly payment to be made as a dividend/loan account entry for accounting purposes.


Whilst I trust my accountant, I wondered if any other contractors were doing the same?

The mileage part i totally agree with but can anyone confirm about the loan account lease payment?

Is the accounting entry in the div/loan acc classed as a business expenses, therefore should reduce corporation tax?

[malvolio]

Where to start...

Stick to your accountant's advice, since you seem to lack a little understanding on what is being proposed - which is that you fund your personal costs from the most tax advantageous income stream from YourCo, i.e. dividend or personal loan. It is not a business expense (and if it were it would attract normal company car levels of BIK at a minimum), and so won't affect CT since dividends are paid out of post-CT funds, while loans are repaid (the clue is in the name) so are basically CT neutral apart from any accumulated interest.

HTH

[Sockpuppet]

If your leasing the car to the company then it'll be a business asset they're providing to you so you'll be liable for BIK. Also you can't claim 45p per mile for something that the business owns.

[Boo]

If your leasing the car to the company then it'll be a business asset they're providing to you so you'll be liable for BIK.

Not if the lease agreement specifically precludes private use.

Also you can't claim 45p per mile for something that the business owns.

The business doesn't own it.

Boo

[Sockpuppet]

Not if the lease agreement specifically precludes private use.

The business doesn't own it.

I'd like to see you argue that with HMRC. Most business don't own company cars the leasing companies do, doesn't stop them being a business provided car.

As far as I can see the OP wants to lease his car to the company and then use it for business miles and charge 45p per mile. For the purposes of this I can't see for the life of me how that your company leasing a car from you and letting you use it doesn't make it a company vehicle.

[Maslins]

...The monthly payment to be made as a dividend/loan account entry for accounting purposes...

Based upon the above, I don't think there is any "lease" of the car between you and YourCo.

I think your accountant's basically saying buy it privately, and if you need the company to pay you some money to help you fund the purchase of the car, it'll be classified as a dividend to you.

[Wanderer]

Stick to your accountant's advice, since you seem to lack a little understanding on what is being proposed - which is that you fund your personal costs from the most tax advantageous income stream from YourCo, i.e. dividend or personal loan. It is not a business expense (and if it were it would attract normal company car levels of BIK at a minimum), and so won't affect CT since dividends are paid out of post-CT funds, while loans are repaid (the clue is in the name) so are basically CT neutral apart from any accumulated interest.

HTH

Wow. No, that doesn't help at all. In fact it's the biggest load of gobbledegook I have read for a long time. All that talk about leasing, personal loan, business expense, BIK, accumulated interest etc makes no sense at all.


Dickvand, all you need to do is draw the money from the company in the normal way as salary/dividends and buy yourself a car with it then claim 45/25p per mile for expenses. Simples.

[malvolio]

Wow. No, that doesn't help at all. In fact it's the biggest load of gobbledegook I have read for a long time. All that talk about leasing, personal loan, business expense, BIK, accumulated interest etc makes no sense at all.


Dickvand, all you need to do is draw the money from the company in the normal way as salary/dividends and buy yourself a car with it then claim 45/25p per mile for expenses. Simples.

S'funny. Though it made perfect sense, as well as being factually accurate, especially since you are saying exactly the same thing. Which bit are you having problems with?

[Sockpuppet]

S'funny. Though it made perfect sense, as well as being factually accurate, especially since you are saying exactly the same thing. Which bit are you having problems with?

Even the bit about the leasing it to your co?

[malvolio]

Even the bit about the leasing it to your co?

Where did I say that?

Tricky to argue with people who can't read...