Offsetting lease car costs

hopefulfooluk

Hi all,

I am a sole trader and have a query about how much I could legitimately offset in lease car expenses against my tax when it comes to my self assessment.

I am VAT registered and understand I can claim back half the VAT on the lease payments as the car will be for both personal and business use.

I am aware that I can claim back 100% of the VAT on servicing and repairs, even though the car is used for some personal use.

Is it possible to offset any of the lease payment itself against my tax liability given that the car will be for business and personal use?

Thanks in advance,

Chris

fengirl_2

I can't answer your question about VAT, but as far as income tax is concerned, you can include all the leasing costs in your accounts along with your other motoring expenses. You then add back on your self assessment the private element of the motoring costs - 50% may apply to some people, but its not a fixed amount. You need to keep records of private mileage for 3 mths or so so that you can make a fair estimate.

hopefulfooluk

Thank you Fengirl, much appreciated.

johncarlton

If the governement ever investigated how would they know and proove if you actually put personal mileage down as business? Surely this can't be governed!

hopefulfooluk

johncarlton wrote: »

If the governement ever investigated how would they know and proove if you actually put personal mileage down as business? Surely this can't be governed!

This is a "cutting tax" board, not an "evading tax" board - most of us want to keep it legal!

fengirl_2

HMRC does not have to prove that your private miileage is correct. Inspectors use many methods to check accounts and they only have to find one error in your records and the whole thing is up for scruitiny. They would compare your work diary and invoices with your mileage log, for instance.