Most tax efficient way to finance a car as a limited company

geeba88

Hi - I'm wondeirng if any financial guru's can help me with the following conundrum.

I'm in the process of setting up as a limited company as i'm switching from being permanent paid employee to being a self-employed consultant. I'll be handing back my company car when I leave my current job, and will therefore need a new car for my contract work. My question is therefore how I can most efficiently pay for my car? Should I pay for one through my company, or should I buy or lease, claim business miles etc. I'd anticiapte i'll be doing approximately 30000 business miles a year.

My head is spinning with what to do for the best - any advice would be greatly appreciated.

Pennywise

You have to do the sums. There are plenty of online car tax calculators to help you. Your answer will depend on the price you pay for it, it's list price when new, its CO2, fuel type, private mileage, business mileage, whether bought, financed by loan or HP, or leased/rented, and whether co is VAT registered or not.

A few general rules of thumb:-

A "perk" car, low cost, low CO2 with few business miles usually better owned through company.

A more expensive car for high business mileage usually better owned personally and claim 40p/25p per business mile.

Older cars usually better owned personally than newer cars.

Most owners of their own limited companies buy their car personally, pay running costs personally and just claim the 40p/25p per business mile from their company towards the running costs.