Self Employed - I want to lease a car
AbstruseAlan
Posts: 31 Forumite
in Motoring
Hi guys,
I'm a carpet fitter and self employed. I do all my work as a subcontractor and my boss basically pays our CIS tax (20% each week) blahblah.
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?
I'm a carpet fitter and self employed. I do all my work as a subcontractor and my boss basically pays our CIS tax (20% each week) blahblah.
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?
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Comments
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i think unless you're vat registered you can't reclaim the vat...everyone has to pay the vat but you can reclaim it if vat registered.
tbqh vat registration would be a nightmare...eg you would have to charge vat on your fitting costs, deal with very intrusive vat visits and have lots of nasty forms to fill in. dont go there0 -
bobbymotors wrote: »i think unless you're vat registered you can't reclaim the vat...everyone has to pay the vat but you can reclaim it if vat registered.
tbqh vat registration would be a nightmare...eg you would have to charge vat on your fitting costs, deal with very intrusive vat visits and have lots of nasty forms to fill in. dont go there
I genuinely don't pay for much expense wise. I'm self employed but work under the same contractor who pays and provides all tools/materials etc. Each year I have to a tax return anyway so I don't think it'd be much hassle.
I mean leasing the car I'd have to put down how much the car would be for personal use in comparison to business use and work out percentages of cost then I'm sure? Hopefully someone knows better than me anyway, it's all a little confusing.0 -
The difference between Business and Personal Lease rates is entirely down to the VAT. Part of it is simply marketing - they are allowed to market VAT-exclusive prices to businesses, but must show VAT-inclusive prices to private customers.
In addition (1), I think you would need to be a VAT-registered business in order to be in the position to reclaim the VAT on the Lease payments.
In addition (2), a car leased by your business and used by you on a private basis would be a taxable benefit to you, which would be taxed as such attractiing an additional payment to HMRC.
Overall, you'll probably find it cheaper and easier just to pay the personal lease rate.0 -
Cornucopia wrote: »The difference between Business and Personal Lease rates is entirely down to the VAT. Part of it is simply marketing - they are allowed to market VAT-exclusive prices to businesses, but must show VAT-inclusive prices to private customers.
In addition (1), I think you would need to be a VAT-registered business in order to be in the position to reclaim the VAT on the Lease payments.
In addition (2), a car leased by your business and used by you on a private basis would be a taxable benefit to you, which would be taxed as such attractiing an additional payment to HMRC.
Overall, you'll probably find it cheaper and easier just to pay the personal lease rate.
Okay yeah, that makes sense. However, each April when I fill in my tax returns, we're told to put down expenses. Now assuming I use the car around 50% to travel to jobs. Do I put the expenses down on my return and therefore I get the tax back anyway?0 -
The issue of tax/expenses for vehicle usage is hugely complex, and your value for money out of it depends on a lot of different factors. I'm more familiar with it in the context of PAYE than Self-employment, but others may be able to advise.
In PAYE, HMRC offers what are called fixed-profit car schemes. These allow the employer to pay a mileage-related expense to the employee tax-free. The maximum allowance was around 45p/mile when I was last in full-time employment. So running your own car, perhaps one a few years old, is probably going to allow you to take a useful amount of money from your business free of tax.
According to this, it IS available to self-employed people...
https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-0 -
Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.
A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.
Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.0 -
Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.
A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.
Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.
Apologies - i've removed my post if its causing confusion. I operate through my own Ltd Co, so not the same tax regime and thus not relevant here0 -
Suggest you go over to the cutting tax forum because some of the advice on here is so wrong.
A self-employed sole trader cannot have a taxable benefit in kind from private use of a leased car.
Incidentally, nothing you have said points to you being genuinely self-employed. Is all your work for the same company.
I'm definitely self employed lol, have been for over 3 years now.
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.
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..0 -
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.AbstruseAlan wrote: »I genuinely don't pay for much expense wise. I'm self employed but work under the same contractor who pays and provides all tools/materials etc. Each year I have to a tax return anyway so I don't think it'd be much hassle.IT Consultant in the utilities industry specialising in the retail electricity market.
4 Credit Card and 1 Loan PPI claims settled for £26k, 1 rejected (Opus).0 -
AbstruseAlan wrote: »I'm definitely self employed lol, have been for over 3 years now.
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.
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..
I think there are some rules around this as I affected many IT cotnractors years ago. Think for tax purposes you could be classed as employed. The rules are specifically for those who only work for one company despite being self employed.0
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