Leasing a car.

[jerry664]

Hi,

I have a car that is leased by my partner which I use solely for business. Due to previous credit problems I cannot lease a car in my name and my Ltd Co. is only 6 months old so cannot lease that way either.

Will I be allowed to enter the lease amount in my company accounts as the agreement is not in my or my company's name?

If it is acceptable to do this, can I account for the VAT included in the lease amount? (My Ltd Co. is VAT registered)

Thanks. J

 

[Lee Jones Jnr]

Get a receipt from your partner each month and you will be able to claim the money as an expense, although this will not allow you to reclaim the VAT.
I think you can only claim part of the VAT anyway.

 

[David Griffiths]

Take proper advice before you try to lease the car through the company (directly or indirectly) as you will be liable to fairly substantial charges for the benefit in kind on private use of a company car.

 

[elaine@cheapaccounting]

Is the partner connected with the company?

 

[jerry664]

Thanks for your responses.

The car is solely used for company business - no private usage whatsoever. What kind of substantial charges could I expect to be charged?

My partner is not connected with the business in any way - I am not sure how that affects things?

Thanks.

 

[Lee Jones Jnr]

If the lease is a private credit arrangement then you will not face any additional charges, but if it is leased as a business user vehicle you will have to pay an amount of tax calculated on the value of the car.

 

[jerry664]

Thanks. So as I am paying my partner the amount of money that she pays the finance company, is that construed as a private credit arrangement?

 

[David Griffiths]

Thanks for your responses.

The car is solely used for company business - no private usage whatsoever. What kind of substantial charges could I expect to be charged?

My partner is not connected with the business in any way - I am not sure how that affects things?

Thanks.

Not even back and forth to work?

Not available for any private trips whatsoever - popping down to the shops etc?

Does the insurance specifically cover your use in connection with the business, as opposed to commuting?

 

[elaine@cheapaccounting]

What kind of substantial charges could I expect to be charged?

Depends on the car's CO2 omissions

See here to find out how much you will be charged as a benefit in kind:

http://www.comcar.co.uk/newcar/companycar/taxcalc/g1select.cfm

In many (not all) cases (unless you have a low CO2) claiming mileage at 40p / mile for 10,000 miles then 25p works out better.

For a limited company this is generally some thing to go through with your accountant.