Sole Trader Car Lease

[ChrisSynfo]

Hi

I will shortly become a sole trader. I have my own vehicle but am looking to replece it and wondering whether leasing a car may be the best way to go.

I expect my revenues to exceed 67k so will no doubt need to register with VAT. I am unclear as to the tax benefits of leasing a car. Say the lease costs are for example 1000 per month and I use the car 60% business and 40% personal, and the list pricve of the car is 60k.

What allowances could I claim for such a vehicle?

Many Thanks for your help

Chris

 

[Magsite]

£1000 must be a really nice car, sorry I can't help with the question but what car are you considering?

 

[David Griffiths]

You would be able to recover only half of the VAT charged because the car is available for private use.

As the car has a list price of more than £12,000, it is classed as an expensive vehicle, and the proportion of the lease costs that can be claimed is restricted.

The proportion that you can claim is (12 + (48/2))/60 = 36/60ths, or 60%. That's then subject to your private uses restriction of 60% business, so the actual allowable expenditure is 36% of the total.

 

[ChrisSynfo]

Many Thanks. I've got a bit to think about now as to which is the best way forward - to buy or lease.

 

[MyAccountantOnline]

New rules apply to cars leased now - there is a 15% disallowance in respect of cars with emissions above 160 g/km.

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[David Griffiths]

New rules apply to cars leased now - there is a 15% disallowance in respect of cars with emissions above 160 g/km.

Thanks Nicola

I saw the release this afternoon, but didn't realise that it came in straight away. The other car tax changes come in from 2011-12, so typical consistency!

Nothing in the budget according to some people but 93 Budget releases extending to 200+ pages.

 

[MyAccountantOnline]

No problem - atleast the latest lot will give us all some bed time reading!!