Benefits of Business Contract Hire for Sole Traders

[fionajob]

My car is nearly 4yrs old and I still have an outstanding loan attached to it. I would like to change my car in the next few months and as I am self employed and do some mileage for the company I work with how much mileage would I have to do to make this worthwhile. How much of the monthly payment can I claim back each month. Although I am a sales person I do not use the car heavily? Any feedback or advice;)

[Jaykay]

My car is nearly 4yrs old and I still have an outstanding loan attached to it. I would like to change my car in the next few months and as I am self employed and do some mileage for the company I work with how much mileage would I have to do to make this worthwhile. How much of the monthly payment can I claim back each month. Although I am a sales person I do not use the car heavily? Any feedback or advice;)

You may either pay all expenses yourself then charge 40p per mile (for the first 10,000 miles then 25p per mile thereafter) or
Charge the total expenses of the car and add back the private use percentage. This is fuel, repairs, insurance, car tax. If on HP, you can claim the interest and depreciation - if leased then you can claim the lease payments but no depreciation.

At which point this becomes cost effective depends upon the business and private mileage and the amount of interest being charged.

Also, do you mean that you are self employed as well as working for a company? If so, the mileage may be split.

[RAL]

If on HP, you can claim the interest and depreciation - if leased then you can claim the lease payments but no depreciation.



I am afraid above is not entirely correct. If it is on HP you get capital allowances not depreciation.

[fionajob]

Many thanks for your replies this will be very helpful in understanding what I can claim back - I think much better that my present set up.

Thank you:)

[Ray Coman]

The more expensive your replacement car, the higher the capital allowances, now that the restriction on capital allowances for cars costing more than £12,000 has been abolished. The new capital allowance system favours cars with lower emissions, and if you wait until April, and obtain a car with CO2 emissions below 110 g per km, then you may qualify for 100% capital allowances.