Car lease?

mikeyboy

Hi,wondering if anyone can help.

I am about to become fully self employed and as such need to get my own car after having previously had a company car through my employers.

I am currently going through the VAT registration now, and am going to be trading as a sole trader for the time being. I have several queries:

Can contract hire be taken out before i have recieved my VAT number?

Can 100% of the vat be reclaimed if the car is used only for business use?

My credit history isnt brilliant, are there any companies which will accept a new startup with little history?

If i went down the route of personal contract hire, could the maintenence and fuel be put through my company account and the VAT claimed back?

Any advice on how to arrange the car lease/purchase in the most effective and easy way much appreciated...

Anyone know any good firms for getting a lease when a new start?



Regards



Mike

billbob

Mike,

If you lease a qualifying car you can only claim back 50% of the VAT charged, the other 50% is for personal use. However you can still claim back all the VAT for maintenance charges and petrol.

To claim back VAT on petrol you must keep a detailed mileage log to show that you are only claiming back VAT on business trips. An easier way of doing this is to pay HM Revenue and Customs a road fuel scale charge (based on the size of your car) which then allows you to recover all of the VAT including personal trips.

You can claim back VAT on certain purchases before the date of registration, I would strongly advise you to read Notice 700: The VAT Guide and Notice 700/64: Motoring Expenses which can be downloaded from the HMRC website. This should give you a basic understanding of the rules.

With regards to leasing a car, I hear that LeasingOptions are meant to be ok.

Good luck with your business!

fguk

Hi

I would concur with everything said above about VAT (although I am no expert). As for contract hire before you are VAT registered, I ended up with a backdated VAT registration date, and was able to reclaim VAT from expenditure and charge VAT to customers retrospectively. You may be ok to do the same. See what your accountant says.

lingscars.com is a good contract hire company. I can personally recommend them, and I think that there are other posts on here somewhere recommending them. The owner of the company, Ling, was on dragons den recently.