HP Car Ltd company

MHagger

Just need to clear up an issue I have.

Ltd company accounts they have an HP lease for car which director uses, both business and personnal.

Can this be put though as an asset of the business
i.e £24,000 for the car

Dr FA 24,000
Cr HP lease 24,000

payment made monthly would be a cr entry to reduce HP amount.

Am I on the right track or not? help.... Please

Bluewednesday

Payment made monthly would be credit bank debit HP account

MHagger

Hi Blue Wednesday

thanks and yes that's what i meant to put, god it's getting late and my typing is get crazy, time to stop for today.

thanks again

Monsoon

Remember if the business own it he will pay a BIK charge. Check if that's tax efficient for him.

payrollpro

It's a bit more than that Monsoon, the company does not have to "own" the vehicle, leasing or HP arrangements also catch it as BIK. One HMRC officer told me at a conference that even if the employer steals the car and lets the employee use it, its a company car for tax purposes!!

I think he was kidding but its a great way of emphasising the point.

Payrollpro

Monsoon

payrollpro wrote: »

leasing or HP arrangements also catch it as BIK.

Thanks PP, sorry, that's what I meant in this case when I said "own" as this particular one is on HP, but it's being capitalised so effectively owned (there's that substance over form again ;-D). The longer answer would have been it might make sense to pay for the HP/lease personally and charge 40p a mile, but if it's already in the company name it might be too late for that!

And, I don't think an employee who nicks a car will be fussed about a tax charge (presumably restricted to 1/365 if he just takes it on a joyride?!?! ) but I like the illustration ;-)