Self Employed: Company Car?

Free_Bird

Hi,

My car is riddled with unreliability issues, and so I would like to change it.

I know that normally I should speak to my IVA company and ask for a couple of payment breaks to fund repairs or buy another banger.

Trouble is, that I have got a new contract which is quite a commute (I live in Southampton, and now have to travel to London), and I find that I will be going from doing 8,000 miles a Year to 2,000 a Month. So buying another cheap car will probably see me in the same situation again in a few Months and is just not viable.

I know I cannot personally finance/lease a car, and straightforward long-term car hire is too expensive.

However, being self-employed via my own limited company, I was wondering if I could lease a car via the company - assuming I get offered the finance etc.

Read lots about Ltd companies being financially separate from individuals, so I'm hoping this won't be a breach of the IVA.

Any one able to help?

Thanks.

UpToMyNeckInIt

Very interesting idea, I too have contemplated this as an option for if my car will not see the IVA through, and/or if I receive a significant income increase (to minimise any increased 'profit' and therefore keep my IVA repayment as low as possible).

Could be quite affordable as well, I have seen things like Ford Fiesta's for around the £100 + VAT mark pcm. Some 'Super-Mini's/City Cars, even less.

Would be great if one of the site experts could advise on this.

My thoughts are that, assuming your company is 'credit worthy', you will be allowed to do this without the need to trouble your IVA firm. As you say: Your Ltd. Company is a separate Legal Entity to you as a person, even if the reality is that 'you' are financially in control either way.

However, I understand that if you have to offer some sort of 'personal guarantee' to the finance company, you will first need to seek your IP's permission.

On the plus-side, I would think that the monthly repayments are written down as operating expenses, so you won't effectively be taxed on them, which will off-set the taxable 'Benefit in Kind' value to some extent.

If you are VAT registered, you will only be able to reclaim 50% of that back (against your Monthly repayments), due to HMRC assuming that you will use the vehicle for personal use as well as business (the 50% rule may apply to your net monthly repayments as well - check with your accountant).

Not sure if you can continue to reclaim 45p per business mile (I assume you do at the moment?), or if you just have to reclaim VAT against fuel/servicing bills etc (all of it against these items), with corporation tax relief against the net amount.

Finally, the BIK will show up on your personal tax return, so if like me you have to submit your latest books at review time, don't be surprised if your IP queries it.

Also check the lease terms for things like the expected condition of the car when you hand it back. I have heard that some firms expect all the tyres to be the original premium brand with 6-7mm of tread left (ie: like new almost). Check for excess mileage penalties as well.

Would be very interested to know how you get on if you pursue this course of action.

Good luck.

FiatFan_2

There are some companies willing to provide finance to iva customers, most provided your IP agrees. There are a couple of threads about it, most relate back to one independent finance company and another couple who found garages who provide the finance personally.

Unfortunately most will charge extortionate interest and the finance company I'm thinking of have a minimum loan of 5K but the car must be below a certain mileage.

If you can do it through your business, sounds like a cracking idea to me.