I have been operating my bookkeeping business for the last five years and have increased my turnover every year. I now work 30 hours a week for 5 different clients and need my car to achieve this.
If I purchased a new car on finance, would I be able to put the monthly payments through my books and offset against tax?
If your turnover is below the VAT registration threshold, then you have a choice between:
(i) claiming business mileage; or
(ii) showing the motor car (and the corresponding finance liability) in the balance sheet of your business. You'd get tax relief on the business use proportion of the running costs, including the finance interest, and be able to claim capital allowances on the vehicle (subject to a private use restriction).
Once you've chosen the method, you have to stick with this until you change the car. Helpsheet 222 runs through this issue.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
