Claiming Car Lease Tax back

osmononame

Hey guys,

I'm going to start working as a GP Locum from 1st August 2012. I'll be self employed and I'll be comfortably in the 40% tax bracket by a long way as I plan to work my socks off over the next year or so.

Now, I would like to lease a new car at about £800/mo for work purposes. I've been trying to do research on the net and wondering if I could write this off my tax bill? If I use this car for "wholly and exclusively for business purposes" - does this mean that I can write off the annual £9600 against my profits? As a GP Locum; I need a car for travelling from my office/home to various GP surgeries, home visits, out of hour centres etc...

As an example, say if my profit was £109,600 pa - would this be reduced down to £100, 000 if I lease this car?

I know this is something to ask my accountant, but you know how it is; looking at cars in the middle of the night and geting excited about what I could have....

Thanks

property.advert

You can obviously afford what you want but that isn't always what you should buy.

I doubt you can avoid any personal usage.

Also, don't confuse expenses as "free" money, as it is only the tax you would have paid on it which is "free".

osmononame

I know that it's not free money, but if it works the same as I think it is - it may cost me about 40% less? Can I also claim mileage on top of this or is it a case of claiming back payments OR Mileage (at 45p per mile)?

I'm rightly or wrongly trying to justify that I need a new car which I have been lusting after for about 12 hours!

I have another car which I will use for social purposes.

Buzby

It all depends on the 'Lease' there are a great many variations, but if a 'personal' lease, the answer is no - they will not allow any reduction. If a proper business lease, and you register for VAT then all this can be reclaimed, however it is expected there will be an element of private usage, and you;ll be expected to account for this.

Unless you form a Ltd company or a partnership, this really may be more time consuming than beneficial.

HappyMJ

It's payments OR mileage. You can't claim both. You can claim for each fuel receipt that you have and for that you really should get a fuel card so that they get matched to the correct car and you don't need to keep the physical receipts.

osmononame

Thanks guys,

I won't be able to register for VAT because being a GP and providing healthcare is exempt from VAT. I will be "self employed" rather than a partnership or a sole trader. If I buy a new stethoscope; I will buy it under my name rather than a "business name" so I don't see why it should be any different in a personal or business car lease?

I am aware that there will be a bit of social use even if I have another car and I only get to claim back on the business proportion of it. However say for arguments sake it's 100% business. So I can them claim back this leasing cost off my end of year "balance sheet" and any fuel that I use for the purposes of using the car for business use? Does it matter that it will be a "high performance" car and above the 160 CO2 threshold. Do they make an allowance for that? There are lots of inconsistent things on the internet and as far as I understand it; tax rules for this changed recently so I'm having trouble getting to the bottom of it.

So say for example, the lease costs me £10, 000 pa and fuel costs me £3000 pa on a fuel card. Can I offset £13000 as expenditure against my income?

Thanks!

antrobus

Buzby wrote: »

... Unless you form a Ltd company or a partnership, this really may be more time consuming than beneficial.

Not necessary, OP is self-employed.

osmononame wrote: »

....Now, I would like to lease a new car at about £800/mo for work purposes. I've been trying to do research on the net and wondering if I could write this off my tax bill? If I use this car for "wholly and exclusively for business purposes" - does this mean that I can write off the annual £9600 against my profits? ...

No, there's something called the Expensive Car Leasing Disallowance (ECLD) which in these enviromentally-concerned days is quite complicated and depends on the CO2 emissions of the car in question. (As far as I can remember anyway.)

And I don't think you'll have much chance of persuading HMRC that there is no private use whatsoever of the car. Apart from the fact that I think there is a question mark of whether the travelling you would do from home-to-practice would qualify as 'business use' anyway.

osmononame wrote: »

....I know this is something to ask my accountant,...

Yes it is.

antrobus

osmononame wrote: »

... Does it matter that it will be a "high performance" car and above the 160 CO2 threshold. Do they make an allowance for that?...

Yes, that's my recollection. If the car is under 160g CO2 there is no restriction, if it's over there is. Oh yes, 2009 Budget by the look of it;

Business cars with emissions over 160g/km For business cars in this category there is a 15% restriction on the net monthly lease.

http://www.businesscarmanager.co.uk/business-car-tax-accounting-changes-2/

richbeth

Hi,
my wife is in a similar position and the advice from the accountant is a very clear 'don't have a company car' as any benefits are at best marginal. The chances of you getting away with saying that there is no personal use is very low and the personal tax bill can be quite high ! They recommend owning outside the company and claiming the mileage rate at HMRC approved rates to maximise the tax free side of this.

Note that HMRC allows you to claim mileage between your home and the place of work as long as the latter is 'temporary' the timescale for which is 2 years so as a locum you should be fine.

IIRC company car tax is calculated based upon the value of the car and the CO2 emissions, part of the problem is that a car under a couple of years old is deemed to have the value of a new car for tax purposes ! So if you spent £25k on a 2 year old car it would be taxed at the new value which may be £35k... so e.g. for a mid range BMW 5 series at higher rate tax payer can pay an additional £2.5-3.5 k tax per annum whether it is new or a couple of years old.

Richard

osmononame

Looking promising...

As a GP locum, my ordinary place of work is classed as my home, so travelling from"home" to GP Practices/work is claimable. I was told this by an accountant not too long ago.

So, if a lease costs me £9000 pa; I can put 85% of that in my annual loss statement? But can I also put the petrol receipts through into my "loss" section to further limit my tax liability?

In addition, is there a way to also claim back the VAT aspect of my car lease payments also in addition to the above (even if I can't be registered for VAT)?

The car will not be a "company car" so will not be subject to company car tax/benefit in kind tax as far as I understand it.

[Deleted User]

Yes you claim fuel costs, service, tax and other costs. I don't think you can claim VAT if you are not registered.