Vehicle required!

trackingtime

I have a problem.

I am a standard rate tax payer, earning less than 35K per year from my day job.

I also am a sole trader dealing in goods with a turnover over of approx 100K per year, but of that only 2% is actual profit. But my overheads are quite high on transport etc.

I have a dilemma.

I am now in the position of having to buy a more modern car, lease one, or should I keep my scrapper and accept the mileage allowance.

I travel approx 26,000 miles per year, 22,000 miles of which is for business purposes.

I would be interested to hear any theories on the value of a business lease of a motor vehicle on a 2 or 3 year lease contract and what kind of tax break I could expect to get in relation to same.

I have looked at a number of vehicles, from a VW Polo at £180 plus VAT per month for 24 months to an E class Mercedes for £360 Plus VAT per month for the same period. And various others in between.

How much would these vehicles really cost me, assuming that I can reclaim any allowable tax breaks etc?

Is there a particular advantage to leasing a really cheap/expensive vehicle?

Would I be better off just buying another vehicle and suffering the problems associated with old age and depreciation.

Do some cars have better value for leasing than others.

I am at your mercy and would welcome any comments.

Kindest regards, TT

silvercar

Before you look at your car I would look at your business!

Turnover of 100k, 2% profit = 2k after basic rate tax = £1,600. Is it worth it?

PasturesNew

I saw/did the same maths. £2,000 profit, taxed .... is it worth it.

You're clearly a hard worker with a keen eye for business. But your figures need to be reworked to create more profit before you plough more time into what you're doing.

A 2% profit can easily become a 2% loss (fuel costs for example), then you'd be chasing around and paying for the privilege

Zazen999

Hi
I am just about to embark on leasing a car for 2 years with a new job. I will be leasing a Prius, the calcs means that I gain on my deal. This is made from the 40p/25p a mile plus £300 a month income; but it costing £300 a month to hire, and 10 per mile to run. My mileage will be relatively high; so for me it is the choice of car that makes the difference.

I am concerned at your business plan though, 2% profit; if you took that down to an hourly rate is it really worth it??? It might be better to look at the business overall, and at reducing those and any other costs if possible? I would get Business Link or an astute business friend in to look at the Business and see if you can. Surely there is some way of reducing/consolidating something to bring the profit up? Can you look at partnering/going in with someone else to provide additional transport etc.

100k is a jolly good turnover; shame to even have to have a day job - what could you make if you were running this business full time ?

I am sure there are reasons etc; and hope my mileage info helped.

trackingtime

Sorry I should have been far more specific.

The 2% is clear profit after deducting all the expenses involved, mostly transport, hotels, flights etc.

Basically the hobby/business allows me to travel the world and use it to pay for my lifestyle.

However I am still faced with the dilemma of whether it is better to sodier on with a 4 year old car and suffer any problems it may give or to lease a brand new shiney model.

If there is little to choose between the depreciation costs and bills associated with running an older vehicle, and similar costs involved in a lease then it would make sense to lease.

But as I said at the outset, I am not sure about how one would stand.

Also if, as a result of leasing I actually made an overall business loss, would this be allowable as a tax rebate on my normal tax paid via my full time employer.

Sorry if these questions seem naive, but I have never considered the situation before now.

Many thanks to all those who have either read or responded.bv