Self Employed - I want to lease a car

Cornucopia

spiro wrote: »

Just a word of caution, if the person you are do working for provides all that you need to be careful about your self employed status especially if you have only worked for one company for more than 24 months.

It seems like we're all equal in terms of IR35, but some are more equal than others. In particular, "office-based" contractors, especially IT, Accountancy and Law are under more scrutiny than traditional field-based contractors like the OP.

Cornucopia

AbstruseAlan wrote: »

I
As far as the car goes now, I'm not even more confused, are you saying I can't put the car down under expenses at all? Surely it comes under travel costs..

What BoGoF is saying is that if you are a self-employed sole trader then you do not have a company that could provide a vehicle under the Benefit in Kind rules.

The info on the Government site suggests two ways to claim vehicle expenses - the advantage of claiming expenses being that they are paid to you tax free.

The link I gave before shows the Fixed Profit Mileage scheme, and the other is to claim those actual costs whatever they are, within certain constraints (mainly around not claiming for the costs of private usage).

https://www.gov.uk/expenses-if-youre-self-employed/travel

Car_54

AbstruseAlan wrote: »

All my work does be for the same contractor yes but I'm on no contract. I'm registered with my UTR number on self assessment etc etc and file my own tax returns each year. He just pays our CIS tax.

If you do work for someone, and he pays you, then you have a contract. The fact that it's not in writing simply makes it more difficult to enforce.

HMRC generally regard anyone who does all (or even more than about 75%) of his business for a single customer as an employee., and expects him to pay tax and NI on that basis.

sheramber

iF the OP is registered with HMRC as a subcontractor then they have verified him and he is treated like he is self employed but the contractor deducts a `fixed amount amount , as specified to him by HMRC, from the subcontractor's payments to cover tax and NIC

Rodney706

There seems to be 2 methods that keep your calculations simple.

If you go down the HP route where there is a finance component to paying for the car. It gets more complicated as loan repayments are not tax deductible, but writing off the value of the car due to depreciation and interest is tax deductible. I am not explaining this route (HP) as I don't know all the tax rules for depreciation. There is also a CO2 emissions calculation.

I am assuming you have private car or a business lease where you return the car after your contract expires and don't have to sell it just return it. I am also assuming that you are not registers for VAT so can't reclaim any VAT back, but also don't charge customers any VAT.

Either method you need to keep good records of business / private mileage in case you are audited. Your car should be insured for business use not just domestic and leisure.


Method 1: Add to your allowable expenses on your tax return 45p for the first 10,000 business miles and 25p for each subsequent business mile. This works well for me as I 'paid cash' for my car and all my car expenses are paid from my domestic bank account. If you use this method your lease payment and car expenses can not be added to allowable expenses on your tax return.


Method 2: (If I used this method, I would pay all the car expenses from my Business bank account). Add to your allowable expenses on your tax return total car expenses multiplied by your business mileage and divided by your total mileage (business + domestic leisure use).

Expenses can be:
Business lease (No loan repayments)
Fuel
Repairs and maintenance (servicing, MOT, oil, tyres)
Insurance
Road fund licence (tax disc)
Warranty cover
Breakdown cover
Interest on a loan to purchase the vehicle

I am not a tax accountant but read their web posts.

agrinnall

Everything up to the last 2 posts took place a year ago, so I think we can assume that the OP has come to a conclusion on his question by now.

BodyOfBones

This thread would have been on Page 155 of the Motoring section before it was brought back to life. So why would Rodney trawl through to find it? Also the last activity of the OP was on 05/12/17

System

AbstruseAlan wrote: »

Anyway, I'm looking to lease a car and noticed it's obviously cheaper to hire it for a business as I don't pay the VAT. Am I able to do this or is there certain requirements? Do I have to choose the personal option and then just when it comes to filling in my rebate each April, include the cost of the lease?

Do you earn £85k a year? If not you're not likely to be registered for VAT and unless you're registered for VAT with a VAT number you cannot reclaim the VAT so you're going to be paying VAT.

It isn't the fact that you're a business that saves you the VAT, you have to be VAT registered too. Plenty of businesses with a turnover below the VAT threshold are not VAT registered so wouldn't be able to reclaim it.


As for the comments from people about him not being self employed because who he does work for is making deductions they're wrong. The construction industry works differently to normal self employment and under CIS rules HMRC require the contractor they're doing work for to make deductions at 20% at source.

agrinnall

Tarambor wrote: »

stuff

Please see post #17. And please can anybody else who is thinking of posting on this thread do the same.