Car Registered to Business Or Personally?

UnderPressure

Hello

Just about to buy a second hand car for business purposes, it will have a shiny new insurance policy for business use but wondering about who should own and pay for it. 3 options:

1/ I pay for it personally and register it personally
2/ I pay for it via the business and the register it to the business
3/ I pay for it personally and register it to the business

What are the in's and out's of the above choices? Is one better than the other? This business is very young around 9 months old, 1st quarter it made a small loss, 2nd quarter it made a couple of quid profit, 3rd quarter it made a couple of hundred profit final quarter will probably finish around 1500 hundred profit. Car is under 1k.

Apart from the financial and legal side of things any tax implications?

I am a bit green on the area of vehicles my other business does not have one so this is the first time they have come into the equation, over the next 3 months we are hoping to add another vehicle which will be a van.

Thanks in advance

trailingspouse

If it's being used solely for the business, it would make sense on the face of it for it to be owned by the business, regardless of the tax implications.

However, I know enough about it to know it's complicated!! This is a question probably best answered by an accountant who understands fully your personal circumstances.

We run our own limited company, but we were told by our accountant not to put the cars through the business (they're used partly for business and partly for personal) - instead we pay ourselves mileage when we use them for business purposes. They're both insured for class 1 use, but are owned and insured by each of us personally.

UnderPressure

It is a sole trader business if that makes any difference?

I presume if it is registered to the business I will be able to run all of it's day to day expenses, insurance, petrol, tax, mot, servicing, repairs etc etc through the business which would be great but not sure if it will cost me in another way?

I have learnt with my other business that sometimes the most oddball way of doing things works out to be the most cost effective so thought it was worth asking the people in the know

I do not employ an accountant, after a couple of terrible experiences with "big" firms I decided they were too much like hard work and since then have just researched when needed and done whatever needed doing myself, as said though this is the first time I have muddied the waters with a vehicle and from what I can find online guidance wise, well it is vague at best!

colino

If you are a sole trader, you are the business, you are self employed and the car is just a business tool with its associated costs (for business use). There isn't a separate business to lodge the car with.

Aquamania

UnderPressure wrote: »

3 options:

1/ I pay for it personally and register it personally
2/ I pay for it via the business and the register it to the business
3/ I pay for it personally and register it to the business

UnderPressure wrote: »

It is a sole trader business ...

There is no difference because, as colino says, you and the business are one and the same.

UnderPressure wrote: »

I do not employ an accountant

Time to reconsider as you clearly do not even understand the basics.

UnderPressure

Thanks for the replies guys I will go and research elsewhere.

spacey2012

I do have to add to other posters, this is really bread and butter day one stuff here you are asking.
Is there any business start up courses locally, think you might be needing a crash course.

UnderPressure

As said twice now I have never had any dealings via self employment with a vehicle being involved in the numbers side of things.

Thanks for the replies I have figured out what needs to be done now.

supersaverg

You can still reclaim for cost to run the vehicle through the business, however, if the business folds (god willing, it will not), the car is registered as an asset of the business and you would lose it.

Aquamania

UnderPressure wrote: »

...Thanks for the replies I have figured out what needs to be done now.

Even if only for the sake of others who are in a similar situation, this may help

http://www.accaglobal.com/gb/en/discover/find-accountant.html

Although personal recommendation is usually best

Prothet_of_Doom

supersaverg wrote: »

You can still reclaim for cost to run the vehicle through the business, however, if the business folds (god willing, it will not), the car is registered as an asset of the business and you would lose it.

If you are a Sole trader, there is no business as such. If it folds YOU fold.

This is why I prefer the more tax efficient Ltd Company, which is a separate legal entity, from the person(s) who hold the shares.

In that case it would depend on a) the miles you travel. b) how old the car is, c) what personal tax liability the use of a company car would give you, d) the type of vehicle and e) how much private use you intended to do.

For instance the tax liabilities of a large 4x4 are better if it's a commercial vehicle (hence why you see lots of 5 seat 4x4 pickups with a cover over the load area)

There would be no tax liability if it were a 'pool' car and never used for private use.

If you mileage is enough and the car big and old, it's more advantagous to pay 45p a mile from the ltd company for business use.