I'm a self-employed bookkeeper and thinking of changing my car. If I decided to do contract hire, would I still need to do a P11d? Would it also be advisable to volunteer vat registration to claim the 50% VAT?
I would appreciate any help and advice on the best way to change my car through my business.
Unless you're trading as a limited company and are a director no P11D is necessary as you won't be an employee.
Registering for VAT would entitle you to reclaim the 50% VAT on the lease payments, BUT this would also mean having to add 17.5% to your sales. Unless we're talking a very expensive lease here it is unlikely to be beneficial to do this. Although you won't be able to reclaim the VAT the lease payments are tax deductable and you will be able to claim it all through the profit and loss, less and private add back.
Thank you for replying. Please can I just ask you some more advice? All my clients are VAT registered so if I did volunteer to be VAT registered and added 17.5% to my invoices, it won't make any difference to my clients, will it? So would this be beneficial to my company or am I missing something?
If the majority of your clients are VAT registered then no, it shouldn't effect your clients as they would be able to reclaim the additional charge. It would be beneficial in as much that you would then be able to reclaim input VAT where you suffer it.
Obviously if any of your clients aren't VAT registered then they would have to suffer the increase or go elsewhere. Sounds like you should be ok though.
