PCP Car Finance and Self Assessment

maderic

Hello, I currently do my own returns and am quite happy with it but I wonder what to do with tax and my PCP finance deal. I am self employed, use the car 99% for business use, put no deposit down and will VT this car after 2 years. I thought (probably mistakenly) that I could enter each months PCP payment as an allowable business expense? please could somebody guide me on this?

Many thanks
Stuart

Nearlyold

You can't simply claim the PCP payments as an expense, you may be able to claim the interest element.

How are you claiming or planning to claim the running expenses (ie fuel servicing etc) on this car  - Simplified or Actual Costs?

BTW are you sure you'll be able to VT after just 2 years?

[Deleted User]

Moreover - are you confident that you can justify, in the event of any query, that you use the car 99% for business?

On the PCP - what is the cost of the car?

maderic

Yes I can justify the 99%. Yes I can VT it after 2 years. Car value about 21K

Grumpy_chap

Why would anyone take a car PCP deal on a finance plan with intent from the outset to VT part way through?

For tax, the simplest way is probably to treat the car as personal and claim 45ppm / 25ppm for actual business mileage.

Other routes can be open to challenge.

Nearlyold

Grumpy_chap said:

Why would anyone take a car PCP deal on a finance plan with intent from the outset to VT part way through?

For tax, the simplest way is probably to treat the car as personal and claim 45ppm / 25ppm for actual business mileage.

Other routes can be open to challenge.

Used to see this a fair bit, Private hire/Taxi drivers for example would buy a car on PCP, go for a low miles allowance to keep the monthly cost down, drive it until the VT point or a bit after (by which time they'd amassed a monster mileage) in the hope that they could get away without paying the excess mileage charge (the VT legislation does not really cover excess mileage charges either way in the event of a VT), certainly in the early days of PCP's they might get away with it.

Of course they wouldn't put "Taxi Driver" on the finance application, they'd be Transport Managers.