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The Book-keepers Forum (UK) -> General Book-keeping & Accounting -> Advice required: Car Lease/contract hire
Post Info TOPIC: Advice required: Car Lease/contract hire
NA_AA


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Advice required: Car Lease/contract hire
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client has asked what the tax implications are if he gets a toyota prius car on a lease back / contract hire

what costs can be incurred by the clients business and the director (ltd company with 1 director).

Please advice where i can get information on this plus what calculations i need to compute to establish whether the total costs of client taking a car on contract hire is tax effective or not.



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Thanks, Nadia.
MarkS


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I assume the type of arrangement you are referring to is one where the car is leased for say 36 months and then handed back.

Can claim the full cost of the lease as an expense. 

If there is personal use and the ltd company is VAT registered can claim 50% of the VAT.  The other 50% is expensed.

If the CO2 emission is greater than 160g then 15% of lease payments charged to the P&L is disallowed in the tax comp.

If there is personal use then there will be a fuel scale charge if VAT on fuel is reclaimed.

Full cost of the car can be claimed as a tax deduction eg petrol, insurance, repairs.

If there is personal use then will be a fuel and car scale charge based on the CO2 emissions.

Regards

Mark



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
NA_AA


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a few follow in questions

1. regarding VAT - reclaim 50% - the other 50% vat is treated as an expense in the P&L?

2. if >160g then 15% of the lease costs are added back to your PCTCT?

3. what is a fuel scale charge?

4. petrol, insurance, repairs, road tax etc can be put through as an expense in the P&L, and these are allowable expenses for CT purposes?

5. what is car scale charge? is this different to (3)?



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Thanks, Nadia.
MarkS


Expert

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Posts: 1501
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1.Yes

2.Yes

3.If you reclaim the VAT on fuel some of which is personal then you need to pay back a fixed amount of VAT based on the CO2 emission of the car to compensate for this.  See the following link

www.hmrc.gov.uk/budget2011/rates-allowances.pdf
 
4.Yes
 
5.No mean a car and fuel P11d benefit rather than scale charge.
 
Regards
 
Mark


__________________

Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
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