Tax deduction for car loan being on wife's name

roplabda

Hello!

I am self employed and looking to buy a car on finance. I know that car costs are tax deductible in business : private proportion of mileage and so would be the interest on the car loan finance.

My wife has better credit rating, ie getting better quotes for interest terms on the loan. The car would be still on my name (or joint name) and brought into the business anyway. Would the interest expense on the car loan be tax deductible or because the finance is not on my (or my business's name) it wouldn't be.

I would greatly appreciate any responses and suggestions as this would help make the decision as of under whose name the loan should be (i.e. tax saving > saving on interest). I am willing to buy a car soon.

Thanks very much!!

chrismac1

It's a business expense - at least the element being used for business - so yes, tax deductible. Remember though that you always have the 40 pence per mile option which avoids this sort of hassle. if it's a close run thing between the "actuals" and the 40 pence, use the 40 pence as there is nothing really HMRC can challenge other than "500 mile round trip London to Brighton, you're having a laugh."

roplabda

Thanks very much to both of you! it was really helpful! I was claiming expenses based on the business/private proportion on the existing car, but may reconsider the 40p/25p scheme for the new one, given change is allowed upon replacement.

Thanks again!