Company Car Advice

jason.parker.86

Hello,

I wondered if I could get some helpful advice.

I have a full time job where I am an employee and I also have an internet business where I will be registered as self-employed. My internet business now requires me to take a large volume of items that I have sold to my full time job to enable parcelforce to collect from my place of work.

For this I will probally need a new car (Estate) or a LGV (Pickup Truck).

My question is:

I heard that if I was to buy the pickup truck, as its classed as an LGV all mileage and expenses on this vehicle will be reclaimable.

Which route is the best to go down? Buy the pickup or use a estate and charge the business the 40p per mile (for the first 10k) for all business milage

fengirl_2

Whatever kind of vehicle you use, the running costs should be put through the business. It is not possible to say which method is the most beneficial as it depends on the running costs of the vehicle and the number of busness miles. I suggest you keep records for both for your next accounting year and the include in your accounts the most beneficial expenditure.
if yooou are VAT registre you have to use the actual running costs.

jason.parker.86

No I am not VAT registered but the question is - if its a LGV can i put 100% of all costs to the business?

fengirl_2

Only if there is no private use.

jason.parker.86

But I thought that is where the BIK comes in? i.e. if you get unrestricted use of it during personal times you pay a BIK?

fengirl_2

BIK relates to a car provided by your employer.
From your question, I thought yoou were thinking of buying a larger vehicle for use in your business. As you and the business are one and the same, you put all the costs of your business vehicle through the business books. If there is any private use of the business vehicle, you add back the private use on your self assessment, so the private use is disallowed for tax puroses.

jason.parker.86

I see - so basically if the pickup costs me £10,000 then I can put this cost against the business?

I.e. If my business makes 10,000 profit, and my car costs 10,000 then effectivly I have broken even and no tax is due?

How would I charge the usage? i.e. all business milage would be charged at the gov't guideline of 40ppm & 25ppm, or just charge a % of all costs in fuel, servicing, etc... to the business.

I.e. If i used the car for 80% business then 80% of all costs would be chargable?

fengirl_2

No, the actual cost of the vehicle will attract capital allowances which are 20% of the cost, written down each year, but only if you choose not to use the 40p/25p pm method. Please refer to my original reply - you need to compare the 40p/25p method against the actual cost of running the vehicle plus capital allowances, in order to see which is more beneficial to you.
If you choose the actual cost method, you include all the costs in your accounts and then add back your private use (say 20% as in your example) in your self assessment.

jason.parker.86

Yeah but where I get confused is that if the car is not a car, but a double cab pickup which is deemed a commercial vehicle, wouldnt the AIA entitle me to claim 100% of this (upto 50k)?

fengirl_2

On the face of it, AIA would be due, but check with your accountant as I have no practical experience of the application of this allowance. If you claimed this, you would need to also include all the running costs of the vehicle in your accounts. If this produces a loss, this can be carried forward or set against your other income for the year. You cannot claim AIA with the 40p/25p method.

jason.parker.86

Yeah this is the thing you see - I know this year I will make a loss and probally get a rebate against the tax in my full time job - however I will also probally make a profit in year 2, so it will even it self out in time.

As for the 40/25p allowance, I wouldnt claim it - I would simply just claim all running costs of the vehicle to the business. I know technically I will be going to and from my main employmennt or place of work in the commercial vehicle; but techincally it is an expenses of running my business.

The way I see it is - to enable my business to work / run I have to take items to work to enable them to be collected by the couriers. I can not do this with a normal car due to the size of the goods, so I am not being unfair claiming for it.