A company car is a benefit so the employee will be taxed for the privilage of the usage, I am not up to date on the figures but HMRC website will tell you more, and of course if they use it for private use the employee cannot claim back all the expenses, only the percentage that is used for business use. Also there is a limit on what can be claimed back as a capital expense by the company purchasing the car. The link below may help.
All the expenses of a lease car provided it is totally for business use are reclaimable. If it is used for private use as well you can only claim the expense amount which relates to the business use.
Sue
-- Edited by Sue T on Saturday 26th of June 2010 10:22:06 PM
-- Edited by Sue T on Saturday 26th of June 2010 10:28:01 PM
The usual query for this is advantages of leasing a car as opposed to buying a car. A leased car may still be a company car. Is the client trading via a ltd company and the car is for the client? This would usually indicate a company car whether leased or bought. More details would be useful.
Hi Rob Yes it is a ltd company, the car is for one of the directors, also can I throw in a payroll question, I've just started to do payroll & an employee has some expense would these go through the payroll before/after tax or do they get paid seperatly?
Depending on what these expenses are, I would pay them seperately, as they may not incur tax/NI etc. You have to watch expenses, as you may need a dispensation from HMRC if they are going to be a regular thing. You cold pay them through the payroll but this could complicate things for you....
With the car thing, a leased car will still be a co car. Beware as HMRC are now getting very hot on this area as they have been told to go out and find some money!
I concur with Phil on both points. However if you pay expenses via the payroll, eg business mileage you can nomally set up a 'post tax/NI' payment, so tax and ni isn't calculated on those expenses.
The only way the lease car will not be a company car is if the director is paying for it personally and it is in his name (and not claiming the vat!)
THank you guy for your help, much appreciated. It will go through the company so do the lease payments fo on the P&L or B/S the lease will only be for 12 months?
The lease interest payments will be a cost to the business, so will go on the P&L, but the main part of the lease, if for a fixed period, would go on the BS, showing the total cost reducing as time goes by. Also, if VAT registered, only 50% of the VAT can be claimed.
