Running a car through a Ltd

stphnstevey

I will work as a contractor and will be doing alot of travelling. This mileage will be reimbursed by the client.

If the client reimburses 40p mile 1st 10K and 25p rest - I just let my Ltd pay me this rate with no further tax liability for Ltd or me.

If the client reimburses, say 13p a mile -
a) Can the Ltd pay me 40p mile and claim the difference as an expense deductible against pretax profits?
b) Can the Ltd pay me 13p mile and then me as an employee claim a tax allowance of the difference between 13p and 40p a mile?

'(a)' sounds better as I can then extract a smal amount of the company profits tax free?

I have read that paying a mileage allowance is an easier way of covering the cost of car expenses than claiming for the capital cost?

However if the company purchases the car or van, could they claim the VAT back if VAT registered? Also claim back the cost of providing a company car (ie the capital cost)?

chappers

Not sure about the mileage claims etc but you potentially talk of a van now that is a much easier proposition to claim the capital costs, including VAT and then susequent fuel costs on.
the HMRC seem to think tah people will atke the pi55 because it's a car and use it as a ruse to claim for their personal car but won't do that if it's a van.
I know several self employed people who have no car but use their van as their own personal transport yet claim for all of their van and their fuel including their personal use too.
If this car is for totally businness use and you can satisfy HMRC that it is then you can make capital claims for it.

fengirl_2

a) the Ltd company does not claim anything, but would need to include the reimbursed amounts in its takings. As an employee of the company you could claim from it the 40p/25p per mile for using your own car.
b) yes, but what is the point as its all tax free.
It is easier to use the mielage allowance to cover the cost of business miles, but if the company is VAT registered, it has to use the actual method of recovering car costs on vehicles which it owns. VAt is not recoverable on the purchase of a car.
I have seen it said that with the rising cost of fuel, the actual recovery method is more beneficial.

chappers

As Fengirl says it is probably easier to claim mileage for using your own car, and not that I am advocateing defrauding HMRC but they would probably find it hard to prove if you claimed some of your personal mileage as business milage to help recover some of the rising fuel costs.
You could always go down the company car route but that would obviously have a tax implication on your income.

stphnstevey

what about if it was a van I bought throught the company - sounds like the VAT and running costs are fully refundable?

stphnstevey

Does anybody know anything about claiming back the VAT for a van bought for the company?