self employed car purchase advice pls

pendragon · Nov 23, 2007

I'm buying a Mitsubishi L200 Raging Bull, which is classified as a commercial vehicle.

I'm VAT registered but dont know whether to puchase as an individual or through the company.

If through the company, I can go either contract hire or lease purchase, but i'm not sure how this will effect me tax wise etc.

Any advice will be greatly received.

stevebrowne · Nov 23, 2007

I don't know if the revenue rules have changed in recent years, but certainly my accountant has always said to try and avoid running a compnay car, and instead run a private car but claim every valid business mile you can as expenses. If you do a decent amount of business mileage you may be able to claim enough to actually cover the lease/finance payment.

Private car also has no impact tax-wise, and the mileage allowances are pretty clear (and tax free)

First 10k miles - 40p per mile
Over 10k miles: 25p per mile

Ellis · Nov 24, 2007

This from Mitsubs website

" * If you drive an L200 for unrestricted private use then your BIK liability increases to £3,000 x your marginal tax rate as from the 6th April 2007. This means that if you are a 40% tax payer you would actually pay only £1,200 in tax (a 22% tax payer would pay just £660).
* If your employer provides your fuel to include unrestricted private use, an additional BIK liability of £500 will apply. The actual tax payable is calculated as above i.e. a 40% tax payer would pay only £200 (a 22% tax payer would pay just £110).
* Employees who use an L200 for business purposes only (and do not use the vehicle for private purposes) have no tax liability."

It also says it only does 8MPG!!! - is that correct?

Jeewhizz · Nov 24, 2007

You would be better off asking your accountant (you do have one yes?). If not, then try asking in the appropriate forum at ukbusinessforums.co.uk

retired_member3 · Nov 24, 2007

8mpg!!!!! :???:

aZooZa · Nov 24, 2007

I personally would run it as a private vehicle and not have to bother with BIK, but if it's 8mpg, I guess it's more of a balancing act. Ask accountant I think.