Car Leasing – What can I claim?

by Readers Question

15:29 PM, 25th July 2017
About A year ago

Car Leasing – What can I claim?

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Car Leasing – What can I claim?

I’ve searched all the threads and can’t seem to find an answer regarding cars? I am a Landlord paying tax by self assessment and I am about to buy or lease a new car.

I have set up a new company and according to HMRC I can pay myself 15% of total rental income as a wage for my rentals.

The question is, if I lease a brand new car, can I offset any of the expenses in self assessment or in my company?

It does not seem very clear on the HMRC website.

Anyone know the answer?

Sarah



Comments

Neil Patterson

15:37 PM, 25th July 2017
About A year ago

Hi Sarah,

From a previous article:

Working out tax claims for using your car in a property business is enough to drive any landlord mad.

On the one hand, HM Revenue and Customs accepts landlords to set the money off against rents, but on the other the rules and regulations make claiming travel against tax hard work.

To clarify claiming travel expenses for buy to let landlords, here is a quick guide to the rules.

First, let’s look at common claims that just provoke hassle with the taxman:

Claims if you have a letting agent

You can still claim some travel costs. But not a lot if you have a letting agent managing your properties. The taxman’s view is if you are paying a manger to look after your buy to lets, why are you claiming to do the same work?

If you are visiting the properties to complete work over and above the letting agents brief, then a claim is possible.

Aborted property costs

Forget claiming for viewing properties that do not go through – the cost is claimed against rental income. No rent generating property means no income, therefore nothing to claim against.

Now, let’s get down to using your car for your property business and how to claim some of the costs to pay less tax:

Apportioning your costs

Apportionment is sharing out the costs of running the car fairly between private and business use.

The easiest way to do this is to take the annual mileage for a tax year – between April 6 one year and April 5 the following year.

Divide the mileage in to two parts – private and business
Work out the percentage use for business
Use that percentage to split off the business cost of fuel, maintenance, insurance and the excise licence.

Here’s an example:

You have a car and drive 24,000 miles in a year, claiming 6,000 are for your property business.

Use this formula to work out your apportionment:

Property business mileage DIVIDED BY Actual vehicle mileage TIMES 100

In our example 6,000 divided by 24,000 x 100 = 25%

Now take the costs of running the car and add 25% of them as a property business expense in the same way as you include repairs, mortgage interest or professional fees.

Defining business travel costs

The key term is ‘wholly and exclusively’. A business trip must be solely for the property business – stopping off at the DIY on the way to work does not qualify.

Going to the DIY and then to a buy to let does.

If you run your business from home, you can charge from home to a property or an other destination for business, but if you have an office away from home, you cannot charge commuting to and from the office to home.

All normal costs of running a car can be claimed, like fuel, oil, insurance, servicing, repairs, cleaning, excise licence, AA membership, and any interest on finance for the car.

You can also claim expenses incurred on a business trip like parking and tolls – but not parking fines.

Capital Allowances

Capital allowances are tax reducers that are not claimed in the accounts but as a deduction in your tax calculation.

Basically, they are a relief for investing money in a business. Capital allowance rules for cars depend on the vehicle’s CO2 emissions and cost.

Keep a record

List your business trips in a mileage log that records the date, distance in miles, start place and destination plus reason for the trip. This log details the business mileage figure you base apportionment of car running costs against.

So, if this log says you travelled 3,000 miles for business in a tax year, it’s the 3,000 miles you use for apportionment, not an estimated figure.

Mr B2L

15:57 PM, 27th July 2017
About A year ago

Through a Ltd Co, you can also look into leasing the car (PCP) and claiming the full lease payment as a business expense, thereby reducing your Corporation Tax liability.

Some great PCP deals out there now and if worked correctly, leasing a car and getting a taxation benefit can be a lot more financially savvy than parting with a lump of cash to buy the car outright.

Ian Cognito

19:23 PM, 27th July 2017
About A year ago

Reply to the comment left by "Mr B2L" at "<a href="27/07/2017" rel="nofollow">https://www.property118.com/car-leasing-can-claim/#comment-93020">27/07/2017 - 15:57":
Contract Hire is a form of leasing but PCP is not; it's a method of financing a purchase (hence, Personal Contract Purchase). If "the full lease payment" is a business expense, then private use must be paid for. If not, there's a taxable benefit.

Roanch 21

12:42 PM, 2nd August 2017
About A year ago

I'm no expert but a car may be seen as a benefit in kind. Are you going to use it wholly and exclusively for your lettings business? Things may be a lot clearer cut if you purchased or leased a Light Commercial Vehicle (LCV). A And it's going to be a lot more practical for you. Maybe a pick Up truck or combo van. I believe an LCV is within reason always going to be accepted as wholly and exclusively used for business purposes as that's why it gets its own taxation class. A company car attracts company car tax which is expensive. An LCV can't attract company car tax because it isn't a 'car'. More info here (similar priced Mondeo car compared with a 4 cab pick up) ...

http://www.vanarama.co.uk/finance-info/van-tax-explained.html

Isabel Stone

10:19 AM, 24th January 2018
About 9 months ago

Ahhh this is actually so incredibly useful! Honestly Im just terrible with knowing what to do with this kind of thing - cars get me confused enough as it is - top that off with finance and money and Im just completely at a loss - so this is genuinely really helpful! In terms of finance (I know this is probably a daft question) but is there a particular brand of car that gets you a better deal? For example are Peugeots going to get me a better finance deal than a Kia? Or is it totally down to the company you get the finance from? If so what are good companies I can go through to get the best deal? Is that admiral one a good one? My friend sent me this link to one called Nationwide (not the bank) http://www.nationwide-cars.co.uk/ - are they good? Or do I used confused.com or something? Honestly I have absolutely no clue so any advice or recommendations or anything would be much appreciated - single ‘no car mad boyfriend’ needs to really start to learn more about this kind of thing hahaha.

H B

6:56 AM, 25th January 2018
About 9 months ago

If you are using the car for business purposes then you should ensure that this is declared on your insurance. This is likely to increase the overall cost of insurance.


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