23 Oct Car Ownership FAQ’s

Posted at 16:30h in Tax, Family, Frequently Asked Questions, Limited Company by Kevin Batty
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The question of how best to structure the use of a car which is used partly for business and partly for private use, is common. Whilst each situation is specific to your individual needs, there are some general rules that apply and, that are worth knowing.

Sole Traders – What motor expenses can I claim?

Sole Traders can claim all motor expenses, including;

  • Fuel
  • Car tax
  • Insurance
  • Breakdown membership (AA, RAC, etc)
  • Parking costs
  • Lease payments
  • Loan interest

These expenses need to be apportioned in the appropriate business/personal usage ratio. It is also possible to claim tax relief on the cost of the vehicle (apportioned on business/personal use ratio) via capital allowances.

Home to work journeys – can these be claimed

If a self-employed person has a base of operations that is separate to their home, then the cost of travelling between home and that base will be treated as ordinary commuting and therefore is not tax-deductible.

However, where a person’s base of operations is at their home then the cost of travelling between their home and where work is carried out should be allowable.  HMRC are paying more attention to where people claim their base of operations is at – each case will clearly depend on its own merits but in recent cases the fact that business records were kept and written up at home, that tools of the trade and equipment were kept at home and that new work was sourced from home were all contributing factors taken into account in determining where the base of operations was.

Company Car – what relief can I claim through my limited company?

If a company owns the car then it can claim full tax relief on all car related expenses, including repairs and maintenance costs, insurance, car tax, depreciation, etc. There is no apportionment of business/personal usage as there is with a sole trader. However, there are personal tax implications on the director of personal use of the vehicle.

These implications are dependent on the carbon emissions of the vehicle and the list price of the vehicle. Typically, the higher the carbon emissions the higher the personal tax due for private use of the vehicle.

Owning a Car Personally – can I deduct any expenses from my company?

Where you have a personally owned vehicle you can claim mileage costs from the company for business journeys. The claims can be made at 45p for the first 10,000 business miles and 25p thereafter. Remember though – travelling from home to work DO NOT classify as business journeys – these are private.

Need Help?

If you are thinking about changing your car or concerned your not claiming your vehicle expenses in the most tax efficient way and would like to discuss your options in more detail please contact us