Make it count Make it Count 3 Spring2018 RLK_web | Page 4

A new pair of wheels If you’re in a spin about how to buy a new car for your business, take a look at the options LIMITED COMPANY i) Buy personally If you buy a car personally that you intend to also use for business, you cannot claim the initial cost or finance costs as an expense. There is also no tax relief on road tax, insurance, fuel or servicing. However, you can claim the qualifying business mileage against corporation tax. The rates provided by HMRC are worked out to include all running costs and wear and tear. (See table below.) 5-minute self-audit checklist Buying through a limited company allows you to claim all day-to-day running costs as expenses. ii) Buy through limited company This option allows you to claim all day-to-day running costs as expenses. You could also claim capital allowances on the cost of buying the car. For any personal use, you would have to pay income tax, as this is seen as a taxable benefit. There would also be employers’ NI to consider. If you decide to go down the loan or hire purchase route (a finance lease) resulting in the limited company owning the car, only interest payments are an allowable expense and you can claim capital allowances on the cost of the vehicle, depending on its CO 2 emissions. If the lease is an operating lease (ie the limited company will never own the car), you can the claim monthly lease payments. There is a flat rate disallowance of 15% on relevant payments and it applies to cars with CO 2 emissions above a certain level. SOLE TRADER If you buy a car as a sole trader, it belongs equally to you and the business. You can claim business mileage as per the HMRC rates table, unless you are over the VAT registration threshold of £85,000 or you have already claimed capital allowances on the car. If you are over the VAT threshold, you can use the full cost method and claim MOTs, servicing, repairs, fuel etc and then work out business versus personal use. If you use the full cost method, you can also claim capital allowances on the business element of the cost of the car. If, conversely, you decide to hire a car for a business journey then you can claim all associated costs. If in doubt, get in touch to talk through the best option for your personal circumstances. 1. Review budgets/forecasts and set goals 2. Allocate owners to each area of the budget/forecast and build achievement of budget into objectives 3. Review staff plan for next year and associated costs 4. Check that accounts contain up-to-date view of creditors (people you owe money to!) 5. Check approval process for paying creditors 6. Chase overdue invoices and identify/deal with slow payers 7. Check that you have the correct insurance in place 8. Are your standard customer and supplier terms up to date and achievable? 9. Have you implemented auto enrolment? Type of Vehicle First 10,000 miles in the tax year Each business mile over 10,000 in the tax year Cars and Vans 45p 25p Motorcycles 24p 24p T: 07824 159718. Email: [email protected] 20p Registered Office: 39 Wear Bay Crescent, Folkestone CT19 6AX Company Number 09210024. Registered in England and Wales. Bicycles 20p RLKAccountancy Chartered Management Accountants, ACMA, CGMA www.rlkaccountancy.co.uk