Contract Car / Business Lease
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Hi,
I have just taken on a new client (sole trader) who currently uses their own car for business as well as personal. I have recommended the 40p a mile rule but the client is now thinking about taking out a lease for a new car as the old one is on its way out.
If the car was used for business only then the rental could be charged to the P&L but because the car will also be used for personal, what are the implications to the P&L and the tax computation?
Any help would be great as I have not had this problem before.
I have just taken on a new client (sole trader) who currently uses their own car for business as well as personal. I have recommended the 40p a mile rule but the client is now thinking about taking out a lease for a new car as the old one is on its way out.
If the car was used for business only then the rental could be charged to the P&L but because the car will also be used for personal, what are the implications to the P&L and the tax computation?
Any help would be great as I have not had this problem before.
0
Comments
When you say lease for a new vehicle, do you mean a lease or do you mean hire/lease purchase? If it's a lease, and I assume an expensive car, I think you have to restrict the rental going through the P&L. (Someone please correct me if I'm wrong!). I'm sorry I don't know the calculation off the top of my head but I will be able to find it for you tomorrow.
http://www.hmrc.gov.uk/manuals/bimmanual/BIM47717.htm
So you are saying that if it is a 50 / 50 split then 50% to the P&L and 50% to drawings? Would this include all other costs such as insurance, road tax, fuel etc?
V
From 6 April 2009, the lease payments will be restricted by disallowing 15% of the payments if the car has CO2 emissions exceeding 160g/km (before adjustments for any private use).
See http://www.hmrc.gov.uk/budget2009/bn65.pdf paragraph 9.