Just running through my Business Plan along side my study and I would like some advice -
I will no doubt have to visit clients, meetings and run around getting the odd supplies here and there, which is best use my private car (Which would have a vinyl window sticker with web address etc) and what can I claim back or do I purchase a small car for company purposes only. Any ideas ?
Generally the best route is 45p per mile for the first 10,000 miles and 25p per mile thereafter.
The payment is an expense of the business and is tax free on the recipient (provided that you keep to the recomended mileage rates).
It is full compensation for use of the owners vehicle on business and the only allowable additional travel related costs are road tolls and parking costs (not fines).
You must keep a log of every journey showing the miles to and from the site visited, the location, client and the reason for the visit. For that reason its good to keep a small A5 or A6 sized book to log the mileage in, in the car.
The alternative involves running the car through the business and charging a percentage of the running costs based on business usage (you still need to keep the mileage log). This method is a taxable benefit as you are using a car belonging to the business rather than the business basically hiring a car that belongs to you.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
As usual would agree with Shaun's recommendations, as running a company car for a small business if not as tax or cost efficient as using a private car, unless you are doing a LOT of miles.
As Shaun advises the first 10,000 miles can be charged at 45p per mile, so if like me you do less than that in total you gain the greatest benefit/ratio.
Also note that benefit in kind charges for company cars are based on MRP values, so if as a small business you buy a second hand car to save cost, you as an individual pay tax on the new MRP value!
Only other pint to note is that is business is VAT registered you can also claim back the VAT element of fuel cost claimed as part of the mileage claim. You do need a system in place to ensure you have a VAT petrol receipts and can extrapolate the VAT element per litre/gallon to reclaim the correct VAT amount, but that isn't rocket science,
Are you actually going to trade as a limited company? A lot of people say company when they mean business!
If you are limited, then pay a mileage allowance, if you are a sole trader, then you are most likely better off claiming a percentage of the total car costs and capital allowances.
There is only one way to find out, do some calculations.
