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  • FIRST POST
    • AbstruseAlan
    • By AbstruseAlan 1st Dec 17, 7:55 PM
    • 30Posts
    • 2Thanks
    AbstruseAlan
    Self Employed - I want to lease a car
    • #1
    • 1st Dec 17, 7:55 PM
    Self Employed - I want to lease a car 1st Dec 17 at 7:55 PM
    Hi guys,

    I'm a carpet fitter and self employed. I do all my work as a subcontractor and my boss basically pays our CIS tax (20% each week) blahblah.

    Anyway, I'm looking to lease a car and noticed it's obviously cheaper to hire it for a business as I don't pay the VAT. Am I able to do this or is there certain requirements? Do I have to choose the personal option and then just when it comes to filling in my rebate each April, include the cost of the lease?
Page 1
    • bobbymotors
    • By bobbymotors 1st Dec 17, 8:25 PM
    • 543 Posts
    • 737 Thanks
    bobbymotors
    • #2
    • 1st Dec 17, 8:25 PM
    • #2
    • 1st Dec 17, 8:25 PM
    i think unless you're vat registered you can't reclaim the vat...everyone has to pay the vat but you can reclaim it if vat registered.

    tbqh vat registration would be a nightmare...eg you would have to charge vat on your fitting costs, deal with very intrusive vat visits and have lots of nasty forms to fill in. dont go there
    • AbstruseAlan
    • By AbstruseAlan 1st Dec 17, 8:46 PM
    • 30 Posts
    • 2 Thanks
    AbstruseAlan
    • #3
    • 1st Dec 17, 8:46 PM
    • #3
    • 1st Dec 17, 8:46 PM
    i think unless you're vat registered you can't reclaim the vat...everyone has to pay the vat but you can reclaim it if vat registered.

    tbqh vat registration would be a nightmare...eg you would have to charge vat on your fitting costs, deal with very intrusive vat visits and have lots of nasty forms to fill in. dont go there
    Originally posted by bobbymotors
    I genuinely don't pay for much expense wise. I'm self employed but work under the same contractor who pays and provides all tools/materials etc. Each year I have to a tax return anyway so I don't think it'd be much hassle.

    I mean leasing the car I'd have to put down how much the car would be for personal use in comparison to business use and work out percentages of cost then I'm sure? Hopefully someone knows better than me anyway, it's all a little confusing.
    • Cornucopia
    • By Cornucopia 1st Dec 17, 9:04 PM
    • 9,511 Posts
    • 9,106 Thanks
    Cornucopia
    • #4
    • 1st Dec 17, 9:04 PM
    • #4
    • 1st Dec 17, 9:04 PM
    The difference between Business and Personal Lease rates is entirely down to the VAT. Part of it is simply marketing - they are allowed to market VAT-exclusive prices to businesses, but must show VAT-inclusive prices to private customers.

    In addition (1), I think you would need to be a VAT-registered business in order to be in the position to reclaim the VAT on the Lease payments.

    In addition (2), a car leased by your business and used by you on a private basis would be a taxable benefit to you, which would be taxed as such attractiing an additional payment to HMRC.

    Overall, you'll probably find it cheaper and easier just to pay the personal lease rate.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • AbstruseAlan
    • By AbstruseAlan 1st Dec 17, 9:18 PM
    • 30 Posts
    • 2 Thanks
    AbstruseAlan
    • #5
    • 1st Dec 17, 9:18 PM
    • #5
    • 1st Dec 17, 9:18 PM
    The difference between Business and Personal Lease rates is entirely down to the VAT. Part of it is simply marketing - they are allowed to market VAT-exclusive prices to businesses, but must show VAT-inclusive prices to private customers.

    In addition (1), I think you would need to be a VAT-registered business in order to be in the position to reclaim the VAT on the Lease payments.

    In addition (2), a car leased by your business and used by you on a private basis would be a taxable benefit to you, which would be taxed as such attractiing an additional payment to HMRC.

    Overall, you'll probably find it cheaper and easier just to pay the personal lease rate.
    Originally posted by Cornucopia
    Okay yeah, that makes sense. However, each April when I fill in my tax returns, we're told to put down expenses. Now assuming I use the car around 50% to travel to jobs. Do I put the expenses down on my return and therefore I get the tax back anyway?
    • Cornucopia
    • By Cornucopia 1st Dec 17, 9:27 PM
    • 9,511 Posts
    • 9,106 Thanks
    Cornucopia
    • #6
    • 1st Dec 17, 9:27 PM
    • #6
    • 1st Dec 17, 9:27 PM
    The issue of tax/expenses for vehicle usage is hugely complex, and your value for money out of it depends on a lot of different factors. I'm more familiar with it in the context of PAYE than Self-employment, but others may be able to advise.

    In PAYE, HMRC offers what are called fixed-profit car schemes. These allow the employer to pay a mileage-related expense to the employee tax-free. The maximum allowance was around 45p/mile when I was last in full-time employment. So running your own car, perhaps one a few years old, is probably going to allow you to take a useful amount of money from your business free of tax.

    According to this, it IS available to self-employed people...

    https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-
    Last edited by Cornucopia; 01-12-2017 at 9:49 PM.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • BoGoF
    • By BoGoF 1st Dec 17, 11:05 PM
    • 2,726 Posts
    • 1,964 Thanks
    BoGoF
    • #7
    • 1st Dec 17, 11:05 PM
    • #7
    • 1st Dec 17, 11:05 PM
    Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.

    A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.

    Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.
    • motorguy
    • By motorguy 2nd Dec 17, 12:06 AM
    • 15,825 Posts
    • 9,118 Thanks
    motorguy
    • #8
    • 2nd Dec 17, 12:06 AM
    • #8
    • 2nd Dec 17, 12:06 AM
    Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.

    A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.

    Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.
    Originally posted by BoGoF
    Apologies - i've removed my post if its causing confusion. I operate through my own Ltd Co, so not the same tax regime and thus not relevant here
    Last edited by motorguy; 02-12-2017 at 12:09 AM.
    You are not special. You are not a beautiful and unique snowflake.
    • AbstruseAlan
    • By AbstruseAlan 2nd Dec 17, 2:40 AM
    • 30 Posts
    • 2 Thanks
    AbstruseAlan
    • #9
    • 2nd Dec 17, 2:40 AM
    • #9
    • 2nd Dec 17, 2:40 AM
    Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.

    A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.

    Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.
    Originally posted by BoGoF
    I'm definitely self employed lol, have been for over 3 years now.

    All my work does be for the same contractor yes but I'm on no contract. I'm registered with my UTR number on self assessment etc etc and file my own tax returns each year. He just pays our CIS tax.

    As far as the car goes now, I'm not even more confused, are you saying I can't put the car down under expenses at all? Surely it comes under travel costs..
    • spiro
    • By spiro 2nd Dec 17, 8:29 AM
    • 5,861 Posts
    • 2,818 Thanks
    spiro
    I genuinely don't pay for much expense wise. I'm self employed but work under the same contractor who pays and provides all tools/materials etc. Each year I have to a tax return anyway so I don't think it'd be much hassle.
    Originally posted by AbstruseAlan
    Just a word of caution, if the person you are do working for provides all that you need to be careful about your self employed status especially if you have only worked for one company for more than 24 months.
    IT Consultant in the utilities industry specialising in the retail electricity market.

    4 Credit Card and 1 Loan PPI claims settled for £26k, 1 rejected (Opus).
    • DevilsAdvocate1
    • By DevilsAdvocate1 2nd Dec 17, 9:18 AM
    • 1,496 Posts
    • 2,784 Thanks
    DevilsAdvocate1
    I'm definitely self employed lol, have been for over 3 years now.

    All my work does be for the same contractor yes but I'm on no contract. I'm registered with my UTR number on self assessment etc etc and file my own tax returns each year. He just pays our CIS tax.

    As far as the car goes now, I'm not even more confused, are you saying I can't put the car down under expenses at all? Surely it comes under travel costs..
    Originally posted by AbstruseAlan
    I think there are some rules around this as I affected many IT cotnractors years ago. Think for tax purposes you could be classed as employed. The rules are specifically for those who only work for one company despite being self employed.
    • Cornucopia
    • By Cornucopia 2nd Dec 17, 9:19 AM
    • 9,511 Posts
    • 9,106 Thanks
    Cornucopia
    Just a word of caution, if the person you are do working for provides all that you need to be careful about your self employed status especially if you have only worked for one company for more than 24 months.
    Originally posted by spiro
    It seems like we're all equal in terms of IR35, but some are more equal than others. In particular, "office-based" contractors, especially IT, Accountancy and Law are under more scrutiny than traditional field-based contractors like the OP.
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • Cornucopia
    • By Cornucopia 2nd Dec 17, 9:25 AM
    • 9,511 Posts
    • 9,106 Thanks
    Cornucopia
    I
    As far as the car goes now, I'm not even more confused, are you saying I can't put the car down under expenses at all? Surely it comes under travel costs..
    Originally posted by AbstruseAlan
    What BoGoF is saying is that if you are a self-employed sole trader then you do not have a company that could provide a vehicle under the Benefit in Kind rules.

    The info on the Government site suggests two ways to claim vehicle expenses - the advantage of claiming expenses being that they are paid to you tax free.

    The link I gave before shows the Fixed Profit Mileage scheme, and the other is to claim those actual costs whatever they are, within certain constraints (mainly around not claiming for the costs of private usage).

    https://www.gov.uk/expenses-if-youre-self-employed/travel
    I'm a Board Guide on the Phones & TV, Techie Stuff, In My Home,
    The Money Savers Arms and Food Shopping boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views (especially those on the UK TV Licence) are mine and not the official line of moneysavingexpert.com.

    Board guides are not moderators. If you spot an inappropriate or illegal post then please report it to forumteam@moneysavingexpert.com
    • Car 54
    • By Car 54 2nd Dec 17, 9:30 AM
    • 2,460 Posts
    • 1,598 Thanks
    Car 54
    All my work does be for the same contractor yes but I'm on no contract. I'm registered with my UTR number on self assessment etc etc and file my own tax returns each year. He just pays our CIS tax.
    Originally posted by AbstruseAlan
    If you do work for someone, and he pays you, then you have a contract. The fact that it's not in writing simply makes it more difficult to enforce.

    HMRC generally regard anyone who does all (or even more than about 75%) of his business for a single customer as an employee., and expects him to pay tax and NI on that basis.
    • sheramber
    • By sheramber 2nd Dec 17, 5:52 PM
    • 3,991 Posts
    • 2,967 Thanks
    sheramber
    iF the OP is registered with HMRC as a subcontractor then they have verified him and he is treated like he is self employed but the contractor deducts a `fixed amount amount , as specified to him by HMRC, from the subcontractor's payments to cover tax and NIC
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