Can I Lease a Van I Own to My Own LTD Co?

[purely14]

Hi all.

I own a commercial vehicle (van) personally. Bought via an individual (eg not a company) HP finance arrangement in my own name last year.

I am soon to open a LTD Company of which I will be the sole director. This company will require a vehicle in order to trade.

Initially the company will have little assets and no trading / credit history so i will not yet be able to finance a vehicle for the company.

Am I able to lease the van I own personally to the company that I am a director of? For example if I downloaded a template lease agreement, and set a monthly lease fee (equal to or less than I pay my HP finance company so I am not making any financial profit from this arrangement)?

Is this something that people can do?

 

[NicoJ]

Hi all.

I own a commercial vehicle (van) personally. Bought via an individual (eg not a company) HP finance arrangement in my own name last year.

I am soon to open a LTD Company of which I will be the sole director. This company will require a vehicle in order to trade.

Initially the company will have little assets and no trading / credit history so i will not yet be able to finance a vehicle for the company.

Am I able to lease the van I own personally to the company that I am a director of? For example if I downloaded a template lease agreement, and set a monthly lease fee (equal to or less than I pay my HP finance company so I am not making any financial profit from this arrangement)?

Is this something that people can do?

Maybe prohibited by the finance company. May also cause you issues taxwise.

You can expense the business mileage through your Ltd which might be a better option or trade as a sole trader.

 

[Gyumri]

Leasing assets to your company: A genuine ‘loophole’? - Tax Insider

www.taxinsider.co.uk

 

[purely14]

Leasing assets to your company: A genuine ‘loophole’? - Tax Insider

www.taxinsider.co.uk

Great article thanks

 

[Gordon - Commercial Finance]

The correct way to go about it is to ask the finance company to do a "novation", which transfers the debt to the limited co.

All depends on who the finance co is and whether they're willing to do that or not.

 

[WaveJumper]

And if you do go down this road remember to let your insurance company know

 

[purely14]

The correct way to go about it is to ask the finance company to do a "novation", which transfers the debt to the limited co.

All depends on who the finance co is and whether they're willing to do that or not.

Can't see how that is better than my suggestion to lease it to my own company / or the method linked in the article above?

 

[purely14]

Maybe prohibited by the finance company. May also cause you issues taxwise.

You can expense the business mileage through your Ltd which might be a better option or trade as a sole trader.

I'm aware I can expense mileage but it's not much you get back

Also what issues taxwise are you referring to?

 

[Paul Kelly ICHYB]

I'm aware I can expense mileage but it's not much you get back

45p a mile (1st 10k) actually works out a reasonable amount, however, if you do not do the mileage, it won't stack up.

 

[purely14]

45p a mile (1st 10k) actually works out a reasonable amount, however, if you do not do the mileage, it won't stack up.

Approx 13k per annum in this case

 

[NicoJ]

I'm aware I can expense mileage but it's not much you get back

Also what issues taxwise are you referring to?

Its personal income, I don't know your circumstances but you won't be able to just offset the payments and have a neutral position.

More important is my first sentence. You don't own the vehicle so you need the permission of the owner to lease the vehicle to a third party (which may or may not be given). This is why it was suggested that you transfer the finance to the ltd company.

 

[Paul Kelly ICHYB]

So, you could claim £5250 a year - would that cover your costs?

 

[purely14]

Its personal income, I don't know your circumstances but you won't be able to just offset the payments and have a neutral position.

More important is my first sentence. You don't own the vehicle so you need the permission of the owner to lease the vehicle to a third party (which may or may not be given). This is why it was suggested that you transfer the finance to the ltd company.

Yes as I wrote I'm self employed so this theoretical arrangrment would be on my tax return. Not looking to make a profit from it.

And as its the tax and finance forum Im I'm posting this on I am more looking for the tax / HMRC position on this matter, as opposed to my contractual situation ref the Lease - that's more the domain of the legal forum I'd think?

 

[purely14]

So, you could claim £5250 a year - would that cover your costs?

It would make a good Dent in my hp bill but I seem to lose out when fuel is taken into account. Hp cost and fuel added likely around the £12k mark. Unless there's a way for LTD company to legally pay for my fuel?

 

[JEREMY HAWKE]

The correct way to go about it is to ask the finance company to do a "novation", which transfers the debt to the limited co.

All depends on who the finance co is and whether they're willing to do that or not.

That's the best advice because Gordon said it I wonder what HMRC would say if you did the miles we do in this situation .

I'm absolutely sure that if you did 90 k a year and claimed all this money on this scheme that they might kick off about the ownership
There must be a limit to what they would allow if the director or someone else owns the van and the van is running flat out

 

[purely14]

That's the best advice because Gordon said it I wonder what HMRC would say if you did the miles we do in this situation .

I'm absolutely sure that if you did 90 k a year and claimed all this money on this scheme that they might kick off about the ownership
There must be a limit to what they would allow if the director or someone else owns the van and the van is running flat out

Prob not the miles you do ? I do approx 12-13k

 

[NicoJ]

Yes as I wrote I'm self employed so this theoretical arrangrment would be on my tax return. Not looking to make a profit from it.

And as its the tax and finance forum Im I'm posting this on I am more looking for the tax / HMRC position on this matter, as opposed to my contractual situation ref the Lease - that's more the domain of the legal forum I'd think?

Well yes but what's the point in getting advice on something that you legally can't do?

You've been given the best advice here, mixing personal and company is always going to get complicated so is never the optimal solution in my opinion.

 

[purely14]

Well yes but what's the point in getting advice on something that you legally can't do?

You've been given the best advice here, mixing personal and company is always going to get complicated so is never the optimal solution in my opinion.

Article posted above by Gyumri seems to say its all good if done correctly - I'm a layperson here just trying to get the facts. No one on here has seen the terms of my HP lease so can't say for sure that I 'legally can't do it'

 

[NicoJ]

Article posted above by Gyumri seems to say its all good if done correctly - I'm a layperson here just trying to get the facts. No one on here has seen the terms of my HP lease so can't say for sure that I 'legally can't do it'

Hence the comment that this may be prohibited by the finance company and further comments explaining why you need to check this first!

You can lease a personal asset to a company, I didn't say otherwise. I said it complicates matters.

 

[purely14]

OK to move away from the legal / contractual bit here (as some seem to be missing the core of my enquiry):

Forgetting my vehicle for one second, I also personally own a brand, a website and phone number. I own these personally and have done for 10+ years. They generate 250-300k of business per year in the industry that I work in. I had been leasing these to a third party for a peppercorn amount for last few years as a favour but the third party is retiring so will not need them now.

I am able to use the leads generated by these for my new LTD company if I wish to do so - am I personally able to charge a rent for this service that my brand, website and phone number provide if my limited company wishes to use them?

 

[purely14]

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