Vehicle Leasing & Tax Expenses

[Webscape]

Hi all,

I've read a few threads on the forum with regards to vehicle leasing, but can't seem to find any that answer my question, so here it is

I am a sole trader and i'm thinking of getting a new car on lease, a company car if you will, as my current car (owned outright) has broken down. It will be my only vehicle, so will also be used personally. The car is above the current 130g/km emissions threshold.

What I want to know is how much of the monthly lease cost can I put through the books? And what about the initial up-front lease deposit - can I also put that through the books too? Running costs - would I also be able to claim the 45p per mile for the first 10k miles per year or does this not apply seeing as the company is paying for the cost of the car in the first place?

Thanks in advance for any help - I write code but tax issues make my brain hurt!

Craig

 

[john1989]

You can either claim running cost or the mileage rate, not both.

You can only claim for the business use of the running costs. For example if the car is used 10% for business you can claim 10% of the running costs.
If claiming running costs, I would keep a mileage record for the first few months so that you can substantiate the business use %

 

[Webscape]

Thanks for the reply. When you say running costs, do you mean fuel, tax, etc or is the initial deposit and monthly payment also a 'running cost'?

The car will be used about 75% for business, so does this mean I can claim 75% of the total leasing costs back, including the initial deposit? Even though it's above the 130g/km emission threshold?

Cheers,

Craig

 

[jay.rizk]

I would personally recommend that you use your 'lease vehicle' for just business purposes, that way you can claim back the full VAT and depending on your circumstances you can write it of on your accounts.

You can get a decent lease vehicle such as 5door fiesta for around £130 + VAT per month but watch out for the contract term and deposit amount.

 

[Webscape]

Thanks for the reply but i'm abit of a petrolhead and like a drive at the weekend, but don't want two cars so I was thinking a car suitable for both would be my best bet. Just a little confused as to how much I can write off for tax purposes.

Hoping to test drive the car at the weekend so i'll ask the guy at the dealers how it all works

 

[Lease4Less]

If the lease is a contract hire and the co2 for the vehicle is greater than 130 then 85% of the monthly rental is allowable against tax. This includes the initial payment.

If you are Vat registered you can also claim back 85% of any unrelieved Vat (Vat not reclaimed through your Vat quarter).

You need to speak to your accountant to discuss the most tax efficient way of working this as a lot will depend on mileage and the price of the vehicle as to the best way of financing and writing it down.

 

[SBlundell]

When you say running costs, do you mean fuel, tax, etc or is the initial deposit and monthly payment also a 'running cost'?

The car will be used about 75% for business, so does this mean I can claim 75% of the total leasing costs back, including the initial deposit? Even though it's above the 130g/km emission threshold?

Running costs means all of the costs associated with running the vehicle - leasing, fuel, tax, insurance, repairs etc. As noted previously, you can only claim relief for the business element (or 75% in your case). Because the emissions exceed 130g/km the lease rentals will be restricted to 85% (restricted by 25% personal use - as above).

Are you VAT registered?