Leasing a car - better as Personal Lease or through my Ltd company?

PrincessJR

Hi all,

I know this is a grey area as it depends very much on personal circumstances, however I thought I'd post on here for some opinions on my situation.

(I asked my accountant about car leasing through ltd company and he didnt seem keen on it, saying they usually try to dissuade clients from doing it, something to do with possibly paying more tax but I'm not 100% sure still).

I am self employed, running a Limited company from home.

My car has recently died, and rather than keep gambling on used cars, and dealing with depreciation, I have started to consider just leasing a new car to save on hassle.

When looking at deals, they are much cheaper per month as a 'Business Contract Lease' than 'Personal Contract Lease', and as I work from home, and need my car for work (at least a proportion of the time!) I wondered if it may be a good idea to go through a Business Lease Contract?

I also use my car for the school run, shopping etc so I assume a percentage would be taken away for that, but I've read that the monthly lease payment can count as expenses?

My confusion is around the Capital Gains Tax I've heard about - what is that? Can anyone explain it for me (I think I need an Idiots Guide!!)

Any help appreciated

MataNui

I was in a similar situation and my accountant suggested similar. He said that the company paying me 45p per mile for any business miles would work out much better. Company reduces its tax liability by the 45p per mile, i gain 45p per mile but it doesnt increase my personal tax liability (something like that anyway. Not great on these things which is why i pay for an accountant). If company leases a car for you then you will gain an additional tax liability for the company car which will likely massively outweigh any other benefits.

trailingspouse

Ditto. OH and I run a limited company (50:50 directors). Our accountant stated categorically that in our circumstances we should just pay ourselves the 45p per mile for all business miles on either of our cars. It's simple (we keep a record of mileage, I tot it all up once a month and pay us whatever it might be). If you're VAT registered, your company can also reclaim the VAT on the mileage that you've paid yourself.

So - speak to your accountant.

PrincessJR

Thanks both.

Currently my accountant tells me to use my business account to pay for fuel, and submit all fuel receipts for tax return purposes, rather than p/per mile.

I think he simply allows a percentage for personal use with my fuel costs and the rest is tax deductible...I'm not sure, which is why I have an accountant I guess

OK, I'll look into it more, but maybe just go down the personal route.