Buying a vehicle through your company – Is it beneficial?

Many business owners jump at the chance of putting their vehicles through their own company, but doing so can have significant tax consequences.

If you buy your car personally you’re able to claim mileage for the business miles travelled in your car.  HMRC’s current allowance is 45p per mile, for the first 10,000 miles per year and then 25p for each additional mile.  If you’re taking additional employees in your car then you’re able to claim an additional 5p per mile for work related journeys.

If your car is provided by the company, which is then available for private use, this is classed as a Benefit In Kind on which you would be required to pay tax.  This benefit is calculated using the list price of the car, fuel type and CO2 emissions.

In addition, there is a Fuel Benefit Charge.  This is calculated by multiplying the Fuel Benefit Charge (£22,600 for 2017/18) by the car’s appropriate percentage which is based upon CO2 emissions.

The full benefit is reduced to Nil if the employee is required to make good the full cost of all private fuel.  Furthermore, the company also has to pay Class 1A NIC on the taxable benefit.

There is currently no charge for cars powered by electricity.  The type of car you wish to buy along with your mileage and personal use affect whether it is most tax effective to buy your car personally or through your business.   Ask your Advisor before committing either way.

Considering buying a car through your company? We can work out the tax implications for you to weigh up whether it’s beneficial. Contact our Bolton based accountant, Nicola Roby to discuss the tax implications on 012041 534 031 or contact us via our enquiry form.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

    Follow us

    Tweets by @CHW-accounting

    CHW-Accounting
    @chw-accounting


    Twitter: chw_accounting

    Read enough?

    Want to find out how we can help you and your business? Get in touch today and let's have a chat.

    WHAT'S THE NEWS?

    Grab a biscuit and a brew and read our latest news.

    19 February 2024

    Tax changes – What’s new in 2024?

    by

    We are now well and truly into 2024 and before you know it the end of the 2023/24 tax year on 5 April will be upon…


    Read more >

    12 February 2024

    National minimum wage – a quick guide to the...

    by

    The government sets a national minimum wage and a national living wage to guarantee that workers get a minimum standard of pay. It is a legal…


    Read more >

    7 February 2024

    HMRC to target undeclared dividend payments

    by

    HMRC have advised the Chartered Institute of Taxation (CIOT) that they have commenced a ‘One to Many’ letter campaign directed at taxpayers who HMRC suspect may…


    Read more >

    7 February 2024

    One week on from Self-Assessment deadline

    by

    We are now a week on from the self-assessment filing deadline of 31 January and figures show that more than double the number of taxpayers failed…


    Read more >

    5 January 2024

    Cut to National Insurance from 6th January 2024

    by

    From Saturday 6 January, the average earner will be almost £450 a year better off according to the government.  However, the reality is that due to…


    Read more >

    YOUR CHALLENGES

    No matter what your challenge is, we’ve probably dealt with it before.



    Need an Accountant?

    Get in touch >


    Need an Accountant?

    Get in touch >


    Tax issues?

    Find out more >


    Tax issues?

    Find out more >


    Trying to grow your business?

    We can help >


    Trying to grow your business?

    We can help >


    Managing cashflow?

    We can help >


    Managing cashflow?

    We can help >


    Starting a business?

    We can help >


    Starting a business?

    We can help >


    Looking for funding?

    Need help with funding? >


    Looking for funding?

    Need help with funding? >


    Buying or selling a business?

    We can help >


    Buying or selling a business?

    We can help >


    Adopt the cloud?

    We can help >


    Adopt the cloud?

    We can help >


    What else can we do for you?

    We can help >


    What else can we do for you?

    We can help >
    CONTACT US

    Get in touch, no hard sell, just a brew, a biscuit and a chat.